05/04/2015 12:07 EDT | Updated 05/04/2016 05:12 EDT

Joe Oliver says losing TFSA tax dollars good for economy

Joe Oliver addressed critics of his decision to nearly double the limit for Tax Free Savings Accounts in a speech today at the Canadian Club in Toronto, saying it would be good for the economy for the government to have less and Canadians to have more.

The finance minister shrugged off the potential cost of increasing the TFSA limit from $5,500 to $10,000, which its own estimates put at $85 million in this tax year and more than $1.1 billion over five years.

In a speech before a crowd of influential Toronto business people, Oliver touted various measures of his budget delivered April 21, among them the TFSA increase.

"Some people say by 2080 a lot of money will be lost to the government because of TFSAs, as if that is a bad thing," Oliver said in his speech

"Money government fails to wrestle from taxpayers is not bad for the economy," he continued, adding that most of the money will be reinvested in the economy as consumer spending.

TFSAs are in fact, savings accounts, where some money may sit for years before being spent.

Campaign-style speech

Oliver said that he was "amazed that the two opposition parties promised to roll back the TFSA extension," calling such a move a "direct assault on families and seniors."

He also reinforced the small government mantra the Harper Conservatives are expected to push in their electioneering over the next eight months.

One dollar raised by the government as taxes is $1.50 lost to economy because of inefficiency, he argued.

At the existing level of $5,500 per person, the TFSA savings vehicle already costs the federal government $1.3 billion annually.

The main criticism of expanding the program is that it favours the wealthy and will saddle future governments with a tax leakage problem that could cost billions.

But in an interview with CBC on April 21, Finance Minister Joe Oliver said he wasn't worried about potential loss of taxes and Canada should "leave that to Prime Minister Stephen Harper's granddaughter to solve." 

Many of the provisions of the budget including its infrastructure spending fund won't kick in until after any election.

And the Harper government intends to further hamstring future government spending with balanced budget legislation.

Oliver defended a balanced budget law in his speech, saying Canada has a "moral imperative not to put greater tax burden on our children."