Evidence of meeting #15 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A video is available from Parliament.
Conservative
Lisa Raitt Conservative Milton, ON
Thank you. They don't think so. That's unfortunate.
The other question I had was with respect to TFSAs. Your understanding of TFSAs in the paper that you produced is that TFSAs are significantly different from RRSPs, in that you can take out the benefit or the income you're generating on the TFSA and use it for whatever purpose that you may want to use it, and it's tax free. Do you talk about different kinds of examples of what you're saving for as opposed to focusing on retirement?
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
No, that was outside the scope of the paper. We were primarily or almost exclusively focused on the fiscal impacts or the fiscal cost.
Conservative
Lisa Raitt Conservative Milton, ON
Sure.
Finally, you do mention TFSAs were put forward as a tool for sheltering retirement savings when you convert at a certain age group. Do you know what economist out there, at what company, was the one who wrote the paper and recommended that approach be taken as a tool and the utility of it? He knows the answer.
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
No, I don't know the answer, but I'm betting you do.
Conservative
Lisa Raitt Conservative Milton, ON
I do. It was Morneau Shepell who said TFSAs were a great way in order to make sure that you shelter your...that's why he dropped it. Thank you very much.
Thank you, Mr. Chair. I'm done.
Conservative
Lisa Raitt Conservative Milton, ON
Well, if I have a minute, I can spend the rest of my time refuting the suppositions your government members have said, but nonetheless, I appreciate your humour.
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you, Mr. Chair.
I am particularly interested in Bill C-2.
I would like to thank you once again, Mr. Fréchette, for your thoughtful work to answer to my question. Indeed, you compared the provisions of Bill C-2 on the reduction to the second income tax bracket, which ultimately affects all income above $45,000, the one for income between $45,000 and $90,000, with the measure we proposed, specifically, a 1% cut for the first tax bracket, which would affect 83% of Canadians.
This is being touted as a tax cut for the middle class, but people with incomes under $45,000 do not see a penny in tax relief. Ultimately, I would like you to confirm, based on the figures from the studies you have done, that someone who earns $210,000 would receive more in tax cuts than someone else earning $62,000 per year.
Parliamentary Budget Officer, Library of Parliament
Thank you for your question.
I would ask one of our colleagues, Helen or Carleigh, to answer that question.
Helen Lao Economic Analyst, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Is the question, is someone earning $210,000 and getting more from...?
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Yes. This person would receive a greater total tax cut than someone earning $62,000, despite the fact that there is another bracket starting at $200,000 with a 33% tax rate.
According to my calculations, someone who has an income of $210,000 will be eligible for a significant tax cut that will be higher than that afforded to someone earning $62,000.
Economic Analyst, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Okay. Someone who is earning above $210,000 in this case will be benefiting from the middle tax cut with the reduction of 22% to 20.5%. If they are earning above $200,000, they'll be paying 33% on the additional amount that is above $200,000.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Can you confirm that, as a result of these changes, the income at which people at this income level will start to pay more tax is $217,000?
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
It has been confirmed, then. Everyone with income between $200,000 and $217,000 will benefit from this change. In the case of the solution that I asked you to study, the proposed reduction of 1% in the first tax bracket would have ensured that people who earn more than $200,000 would pay more taxes than they pay now.
Liberal
The Chair Liberal Wayne Easter
I might say, Guy, for the record, when you folks shake your heads, it isn't in the record. You might want to say yes or no.
Dr. Askari.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, with your first point, people under $217,000 will benefit from...yes, definitely, and the 33% will essentially start after that.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Ultimately, about a third of taxpayers will benefit, but two thirds will not see anything and do not benefit in any way from the proposed tax cut. Is this what you find as well?
You said that about 30% of taxpayers would benefit.
Parliamentary Budget Officer, Library of Parliament
It is actually 31% of the population.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
The measure we are proposing, specifically lowering the tax rate for the first bracket from 15% to 14% would benefit 83% of taxpayers. Is that what you find?
Parliamentary Budget Officer, Library of Parliament
That is exactly what we wrote in our report. Lowering the first bracket rate from 15% to 14% would benefit 83% of taxpayers. Obviously, starting at a lower level, we would capture certain taxpayers and that also implies that the other brackets would be affected.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
In short, Bill C-2 seeks to tax about 1% of the population more heavily in order to redistribute money to about 25% of the population in a significant way, let's say to 31%. Therefore 70% of the population will not necessarily see a change, despite the claim that the bill will benefit the whole of the middle class.
Parliamentary Budget Officer, Library of Parliament
If I remember correctly, in our report the 83% referred to the first bracket. In our report, we said that if we started with the second bracket, as proposed by Bill C-2, 43% of taxpayers would be affected. Once again, those 43% do not just include taxpayers in the second bracket, but also those in the third bracket and others.