Just a brief response, please.
Evidence of meeting #77 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A recording is available from Parliament.
Evidence of meeting #77 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A recording is available from Parliament.
11:40 a.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
We are actually planning to release a new fiscal sustainability report in the next couple of months, which will take into account the new measures that the government has introduced, certainly. We haven't really done the calculation, but obviously things like the TFSA could reduce the overall fiscal room the federal government has; how much, I can't really say right now.
11:40 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Finally, in terms of tax cuts and the impact on jobs and growth, is it true that tax cuts in, say, the middle-income levels have a greater stimulative impact on growth in terms of the marginal propensity to spend, as an example, than tax cuts in the higher level?
11:40 a.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Typically, yes; the marginal propensity to consume is higher in lower-income households, absolutely.
11:40 a.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
Mr. Van Kesteren, this will be a very brief round, please.
11:40 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair.
If I have time, I'll hand this over to Mr. Rajotte, but I wanted to finish off my line of questioning. This is not specifically on the legislative part of the balanced budget.
Mr. Fréchette, can you tell us why, or if you believe it's important that, as a government we balance the budget? And what are the benefits to a balanced budget?
11:40 a.m.
Parliamentary Budget Officer, Library of Parliament
In our report, we didn't say why or not. We just made the principles. I recommend that you read the report again; I mentioned that there are some conditions. I mean, the past history in Canada has shown that many provinces that had balanced budgets did not respect the legislation all the time, or amended the legislation.
11:40 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
I'm not talking about the legislation. I want to talk about the importance of a balanced budget and the fact that we are one of the first nations to come out as a balanced budget.
11:40 a.m.
Parliamentary Budget Officer, Library of Parliament
Our view is that a balanced budget is not an idée fixe. It's not something that you should always have in mind. As long as you follow the legislation.... It is the privilege of the government to have this kind of legislation.
In our report, as I said, we mentioned that there are some principles that are really important to follow, including the fact that if you have a natural disaster or any kind of catastrophe, you may have to have a non-balanced budget or have a deficit at that time. Those are important factors to take into consideration.
11:40 a.m.
Conservative
11:40 a.m.
Conservative
The Chair Conservative James Rajotte
Maybe I'll try to state my question again. I am happy to follow up with it after the meeting as well.
My understanding of the TFSA analysis is that your analysis assumes that there are no new savings as a result of this tax-free savings account vehicle. That would be assumption number one.
Assumption number two is that there are no new benefits arriving from the new savings vehicle. In other words, nobody is switching money from their chequing account to a tax-free savings account and thus causing additional investments in a company, which is obviously helping them hire people and create more jobs, etc.
11:45 a.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
That is correct. The way that we have done this study is that this is just a reallocation of the savings that you already have in different forms, whether it is in equities, savings accounts, mutual funds, or anything else. We just switched those from the taxable instruments to the TFSA, which will...to benefit from the tax exemption. That's right.
11:45 a.m.
Conservative
The Chair Conservative James Rajotte
I'll have a discussion with you about those assumptions, because I think I would challenge you. But I do appreciate that clarification very much.
I want to thank all of you for being with us here this morning for a very good session of discussion with our colleagues. Thank you so much.
The meeting is adjourned.