The conclusion of a study in the Canadian Tax Journal that Tax Free Savings Accounts (TFSAs) have become yet another tax break that favours high-income Canadians should come as no surprise.
Canada's tax system is riddled with exceptions, special cases and limited exemptions that are at best inconsistent and at worst profoundly unfair. This didn't start with Stephen Harper but has been systematically exacerbated by his Conservatives, and steadily diminishes our collective ability to finance good public services for all Canadians and to help the most vulnerable to achieve more fulfilling lives.
Only wealthier Canadians are able to take advantage of making contributions of up to $5,000 a year to their TFSA. Sheltering assets of this magnitude over time will result in "a noticeable decline in the federal tax base and an even bigger impact on federal revenues," according to the study's authors. And yet, in the last election, Harper promised to double the contribution limit on TFSAs to $10,000 a year once the federal government returns to balanced budgets.
Sadly, the Harper government has mastered the art of unprincipled tax policy in pursuit of an ideological predilection for a weak national government and a determination to stay in power at all costs. Since 2006, the Harper government has worsened the alphabet soup of exemptions and tax credits that passes for our tax system, by essentially bribing certain segments of the population.
The boutique micro tax credits introduced for everything from transit passes to children's music classes to workers' tools benefit only those with incomes over $50,000 that would buy these items anyway. Similarly, the proposed income splitting between parents of children under 18 that the Conservatives promise to implement once the deficit is eliminated, would most benefit a single-earner family earning over $125,000.
The time is overdue to restore a fair and progressive tax regime that benefits the economy and society and the national interest, not simply the partisan interests of the Conservative government.
The Conference Board of Canada reports that over the past 20 years, only the top 20 per cent of income earners have increased their share of the nation's wealth. They're not the ones who need a break.
We pay taxes so that governments can fund public services -- services that individual Canadians and the private sector can't or won't provide efficiently. Taxes pay for roads and sewers, police and the military, health care and education, and many other benefits we take for granted.
Taxation in Canada is progressive, meaning that those who are more successful and earning more income are expected to shoulder more of the burden of paying for public services. In a progressive system, revenue from taxes also directly or indirectly helps lower-income Canadians and gives them the opportunity to get ahead themselves. We expect taxation to be fair, efficient, and effective.