Susan Eng says TFSA is a good idea to help Canadians save for ongoing retirement needs

Click here to read the article published by CTV News on April 22, 2015.

A day after tabling his first federal budget, Finance Minister Joe Oliver came under fire for suggesting that any long-range fiscal problems resulting from changes to the Tax-Free Savings Account should be left to future generations to fix.

Oliver made the comments Tuesday, responding after one economist estimated that doubling the maximum allowable contribution limit for TFSAs could cost the government billions of dollars within the next few decades.

“I hear that by 2080 we may have a problem,” Oliver said during a CBC interview. “Well, why don’t we leave that to Prime Minister Stephen Harper’s granddaughter to solve?”

On Wednesday, Oliver’s comments were criticized during question period by opposition leaders, who have been were quick to slam the budget – including the plan to double the maximum TFSA contribution to $10,000 — as only helping the wealthy while extending a fiscal headache onto future generations.

“Since when does Canada burden our grandchildren instead of building for them?” said Liberal Leader Justin Trudeau.

NDP Leader Tom Mulcair said the comments indicate that Conservatives intend to leave a “mess” for future generations to clean up.

“I have grandchildren, and like so many grandparents, I do not want to leave the responsibility for cleaning up the Prime Minister’s mess to my grandchildren,” the Opposition Leader said.

Harper defended Oliver’s comments, saying the minister was simply “dismissing a clearly preposterous” argument.

“The Tax-Free Savings Accounts have been great things for the Canadians, for the Canadian middle class and for the economy,” Harper said, adding balancing the budget “is good for future generations.”

“Cutting taxes and allowing people to save and keep money in their own pocket is good for future generations,” Harper added. “Giving money to Canadian families so that they can raise their children is good for future generations.”

The federal treasury is expected to lose more than $1.3 billion in tax revenue this year over TFSAs, according to estimates by the Parliamentary Budget Office and the government.

Susan Eng, head of the Canadian Association of Retired Persons, said on CTV’s Power Play that while Oliver’s comments were a “bit of a surprise,” the plan outlined in the budget is appropriate.

“His own budget papers clearly point out that the increase in the ceiling for TFSAs is going to cost over $1 billion over the next five years,” Eng said. “Those are the proper planning cycles.”

“When you have to go 65 years into the future, you really can’t make serious plans,” Eng added.

She also shot down the argument that it is the only wealthy who will primarily benefit from an increased TFSA limit.

“It is true, you have to have a few dollars set aside. But of the people who have taken out TFSAs, it has been 2.7 million seniors and 60 per cent of them have less than $40,000 incomes.”

Eng added: “So we’re not talking about very wealthy people. We find theTFSA is a good idea to help them save for ongoing retirement needs.”