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
Senior Director, Economic and Fiscal Analysis and Forecasting, Office of the Parliamentary Budget Officer, Library of Parliament
Let's say sectors such as the manufacturing sector or agriculture. Our model is a very highly aggregated macro model.
Senior Director, Economic and Fiscal Analysis and Forecasting, Office of the Parliamentary Budget Officer, Library of Parliament
We have estimates of the impact on the employment level for the entire Canadian economy, and we're able to link those job numbers with the measures that were proposed, using Finance's mapping showing whether the increased spending is going to show up in investment in non-residential structures or in residential structures. That kind of detail we would have.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
I'd be interested in it as well.
Here is another quick question before we move on.
Also in your modelling, did you do any work around...? There's considerable debate on the new child tax benefit and the actual benefits to an average family, I guess is the best way to put it, versus the tax benefits that were cancelled in this budget.
Was there any modelling of how those two would compare?
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
We are working on a report that will look at the new child benefits program, with a distribution analysis of it. That will be ready, hopefully in the next few weeks. We haven't finished it, but it will come out.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Would you also be incorporating under that, the fitness tax credit, the arts tax credit, and income splitting as well, or would it be strictly for the two kinds of child tax benefits?
Jason Jacques Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
To follow up on the point made by Dr. Askari, we're actually working on two requests right now. The first is a detailed micro-distributional analysis, both pre and post child tax benefits. As well, to your point, we're doing a more comprehensive overview of the tax changes seen in budget 2016, both on a pre-imposed basis and on a micro basis for specific types of families.
Liberal
The Chair Liberal Wayne Easter
Thank you very much. You'll have to remain in suspense for three or four weeks, Mr. Liepert, for the outcome.
We will turn to bill C-2. On my list I have Mr. Lefebvre first, then Ms. Raitt, and then Mr. Caron. We'll try to hold it to four minutes each during this round if we could.
Mr. Lefebvre.
Liberal
Paul Lefebvre Liberal Sudbury, ON
Thank you, Mr. Chair.
I want to talk about the TFSAs. Bill C-2 addresses that and reduces the limit from $11,000 to $5,000.
By income group, what percentage of Canadians are currently contributing the maximum amount to their TFSAs?
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Well, in general, about 18% of people who hold TFSAs have maximized their contribution.
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Again, we're working with data identical to that of Finance Canada, which they offered in their testimony to the committee last week. That's the 2013 CRA data.
By income group, you roughly see that individuals who filed T1 returns and who claimed that they had a total income of $45,000 or less, on average maxed out their TFSAs at a rate of around 15% overall. The rate for individuals who were claiming higher income on their T1 returns, above $45,000 per year, was roughly 19% to 20% overall.
So, of one in five Canadians who had a TFSA in 2013 and who reported income of more than $45,000 a year, roughly one in five of those was maximizing their TFSA.
Liberal
Paul Lefebvre Liberal Sudbury, ON
Regarding the limit reduction from $11,000 to $5,000, how would that affect the aggregate savings of Canadians?
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
I think the short answer is that we don't know. So, it's difficult to know based upon people....
We have historical data about what was happening when people were able to set aside $5,000 or $5,500. We don't actually have access to data with respect to the doubling of that rate to $11,000 per year.
What we can point back to, of course, is our publication from last year with respect to the TFSA program. What you saw, in particular for the first few years of the program, was that people were actually transferring wealth, accumulated wealth from non-sheltered accounts into their TFSAs.
As we pointed out in that paper, one would presume that over time, as that stock of wealth that was previously unsheltered slowly dissipated, the contribution rates and maximization rates would begin to drop.
Liberal
Paul Lefebvre Liberal Sudbury, ON
In the estimates you had when you were looking at the TFSAs, if they had been allowed to continue to grow, how much of that wealth would have been put into those TFSAs, based on the average of what is occurring right now?
I know that you had projected how much money would have been taken out of the economy and would not have been taxable if the $11,500 limit had been allowed to continued over the years. How much would that have hurt the Canadian tax base?
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
The long term estimates—and, again, going back to our publication from last year—would put us pretty much on par with the existing RRSP program, going up to 2075. Overall, that would be roughly 0.6% to 0.7% of the GDP.
Liberal
Conservative
Lisa Raitt Conservative Milton, ON
Thank you very much, Mr. Chair.
I'm going to talk about TFSAs as well if you don't mind. I'm going to give a great commercial for the Globe and Mail today, who has a very nice centrefold with respect to how you can actually save money in a TFSA, how much to put in at the beginning, and what kind of returns you can get. I would commend that to the government to take a look at the opportunity cost that we are now going to experience as a result of lowering the level.
My questions is, in analyzing TFSAs, did you do a comparison with the United Kingdom's own approach to TFSAs?
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
No, we didn't do a direct comparison with the individual savings accounts. It was something that we did cover in the annex of the paper we published last year, looking at the examples from the U.K., the U.S., and Japan.
Conservative
Lisa Raitt Conservative Milton, ON
Have any of those countries rolled back or have they increased their ability to input to the TFSA? Have they increased their limits? Are you aware of it?
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
I'm not aware—
Conservative
Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
You seem credible.