LETTER: Tax free savings accounts lack fairness

From reader Rod Retzlaff

It’s tax time again, and as we all know every government since Adam and Eve have promised their charges that they would establish a “fair” taxing system. In Canada we largely tax labour, either by taxing workers directly, or by taxing goods and services provided by labour. So we really do double down on taxing workers. We all know that people with a lot of money manage to make much more money, not by working themselves but by manipulating those of us who are short on funds and need to work to survive.

The Harper government came up with a grand scheme to make taxes fairer for everyone by allowing people to put some of their money in a tax free savings account. The money in that account, and any profits derived from investing that money would remain untaxable. So we were all allowed to put aside $5,000 per tax year. That made it fair, right? Now I know many can easily afford to save $5,000 per year, but I also know there are a few who simply cannot afford to do so. The TFSA works great for those who can afford it. Currently anyone who has been paying taxes for the last 14 years is allowed to put away up to $70,000.

Now if, say, 20 million Canadians did so, there would be, and could be, a pool of $1.4 trillion available for investment in this country that wouldn’t earn a dime in tax revenue for Canada. That is assuming that all the investments were flat and did not grow over the last 14 years, which seems highly unlikely. The Tories tried to double the TFSA amount to $10,000, but that failed to win them the election, and the Liberals wisely stuck with the original $5,000.

Now the Liberals are raising the TFSA limit to $5,500.

So the people who work and produce something can pay taxes through the nose for earning their money by doing so, and investors can sit on their arses infinitely making money and never pay any tax on their investment gains.

TFSAs might be good for some but they are crippling our government when it comes to taxing investment gains, and forcing us to go in debt to provide the services that Canadians need. This is a ridiculous plan and the longer it continues, the worse it will get.

Rod Retzlaff


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