Mr. Speaker, my colleague has always spoken very positively about the need for education, the need for students in Canada to have access to good education and, in our discussions in the foreign affairs and international development committee, the need to incent young students coming from other parts of the world to get their education in Canada.
However, we have some very grave concerns with Bill C-253, which initially contemplated that the deduction would be limited to an RESP annual contribution limit of $5,000, indexed after 2006. However, budget 2007 eliminated the RESP annual contribution limit and raised the lifetime contribution limit to $50,000 from $42,000.
Amendments to the Income Tax Act to implement these changes were made in Bill C-52, which was assented to in June 2007, to which the hon. member has alluded.
These changes were extremely well received. Indeed , Peter Lewis, chair of the Registered Education Savings Plan Dealers Association of Canada, called the changes “a very positive leap forward for Canadian families”. He went on to say:
These improvements will benefit all Canadian families, and provide even greater incentive to invest in their children's college or university education. And that's good for everyone.
We sincerely commend [the] Finance Minister...for recognizing the value and importance of encouraging families to save for post-secondary education.
The proposed amendments adjust the bill to reflect the elimination of the RESP annual contribution limit. The effect of the proposed amendments would be to allow a taxpayer to claim a deduction for RESP contributions of up to $50,000. The amount of the deduction would be reduced by the total RESP contributions made by the taxpayer in previous years.
As we have stated in analysis provided previously, the behavioural impact is uncertain. If the RESP contributions were to increase by 20%, the total fiscal cost of Bill C-253 would be $765 million per year, including a CESG cost increase of $85 million per year.
The proposed amendments, if adopted, would not allow RESP contributors any more leeway in allowing up to an annual $50,000 deduction for their contributions.
While it is uncertain how much this would exactly increase total RESP contributions and the specific long term costs of Bill C-253, it is likely the proposed changes could again increase the cost of the deduction in the early years following implementation.
Therefore, we will not be supporting Bill C-253.