Mintz on Tax-Free Savings Accounts

As Andrew, Marc, Toby and I pointed-out at the time, despite the low up-front cost of Tax-Free Savings Accounts, they will become exponentially more expensive over time. To obnoxiously quote myself, “this measure could burn a significant hole in future government revenues.”

It is worth noting that Jack Mintz, a huge fan of Tax-Free Savings Accounts, suggests essentially the same thing in the latest issue of Canadian Business Magazine:

Flaherty was able to bring in a substantial tax reform at little fiscal cost to the government for the next few years. The real cost will be down the road, when many seniors will have untaxed investment income sheltered in the TFSA. Of course, someone else will be in power by then, and Flaherty’s new account will make life a lot tougher for tax-and-spend governments in the future.

The difference between Mintz and us is his apparent believe that depriving the public sector of revenue is good.


  • I think personal savings are good, given Canadians’ low savings rates. True, maybe only 10% of people will be able to afford the limit, but this is still better than nothing as it encourages smarter consumer behaviour.
    RESPs see the federal government buttress savings with a 20% top up, with I think a $400 bonus annual limit. Ideally, the TFSA would also top up savings with a 20% federal top-up. In an even more progressive scheme, the TFSA would function as a zero-interest crown credit card or even form the basis for a GAI to be phased in. The TFSA idea has potential.

  • Anything I have read states that I can withdraw money from a TFSA at anytime. Is this true? Can I in fact withdraw cash as easy as with a simple savings account in a financial institution?

  • James, that is my understanding.

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