The Conservative Party of Canada’s proposal to double contribution limits for Tax-Free Savings Accounts (TFSA) has received inadequate critical scrutiny to date. This gap may stem from the notion that little revenues will be lost and the perception that most taxpayers would benefit. Both beliefs are erroneous.
This study finds that no case—on either economic or equity grounds— can be found for unconditional doubling of TFSA contribution limits. Over the long run, doubling TFSA limits would cost governments additional billions in annual tax revenues, put most of the lost taxes into the pockets of the already well-todo, and reduce the overall progressivity of federal and provincial tax systems.
The great majority of Canadians would enjoy no significant benefits. In fact, they would bear the burdens of an expanded TFSA by enduring the reduced public services or bearing the increased taxes needed to offset the lost revenues.
‘Double Trouble: The Case Against Expanding Tax-Free Savings Accounts’ is licensed under CC BY-NC 4.0
