Criticisms of the Tax-Free Savings Account
Less than 48 hours after the budget was revealed, there are already many criticisms of the proposed Tax-free Savings Account. Some argue that the amount is not enough, while others argue that all it does is make the wealth middle class richer.
In today's Toronto Star, there is an article which compares the proposed system with the British Individual Savings Account (ISA) in which the critic writes:
This sort of thinking would also poo poo on the idea of RRSPs as well. What the author is failing to see is that in an age where the average Canadian saves next to little what they earn, there is a merit to programs like this. By sheltering the first $5000 every year, the policy clearly helps and gives Canadians an incentive to save up their money. I would say that this new TSA would work well as a rainy day fund for anybody (rich or poor) since it has the benefit of being tax free while at the same time you can withdraw any of your gains (or losses depending on your investment performance) without having to pay any additional taxes.
Will this new policy switch us over to being a massive nation of savers? Probably not, but if as a whole, the nation can improve their savings habits, the retirement and mindset of Canadians will definitely improve. It'll allow Canadians to take a more proactive approach to their retirement. As a result, this will put less strain on the system as fewer people will be dependent on the government to help bail them out in their retirement years. This is surely a good thing, isn't it?
In today's Toronto Star, there is an article which compares the proposed system with the British Individual Savings Account (ISA) in which the critic writes:
- "But almost invariably, the only people who participate are the ones with lots of spare cash – the sort of people who already do save and who would have saved anyway. So it ends up being a giveaway to the wealthy middle class."
This sort of thinking would also poo poo on the idea of RRSPs as well. What the author is failing to see is that in an age where the average Canadian saves next to little what they earn, there is a merit to programs like this. By sheltering the first $5000 every year, the policy clearly helps and gives Canadians an incentive to save up their money. I would say that this new TSA would work well as a rainy day fund for anybody (rich or poor) since it has the benefit of being tax free while at the same time you can withdraw any of your gains (or losses depending on your investment performance) without having to pay any additional taxes.
Will this new policy switch us over to being a massive nation of savers? Probably not, but if as a whole, the nation can improve their savings habits, the retirement and mindset of Canadians will definitely improve. It'll allow Canadians to take a more proactive approach to their retirement. As a result, this will put less strain on the system as fewer people will be dependent on the government to help bail them out in their retirement years. This is surely a good thing, isn't it?
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