Lib­er­als tainted by tax dodges, TFSA cut

St. Thomas Times-Journal - - COMMENT -

It’s not only the wealthy who seek a tax haven. But it’s much more dif­fi­cult for the av­er­age Canadian to achieve even a frac­tion of the tax-free sat­is­fac­tion that seems to come so eas­ily to those with mil­lions. And when some mod­icum of re­lief seems to be as­sured for the mid­dle-class, mea­sured in thou­sands of dol­lars, the po­ten­tial is spoiled by the fed­eral Lib­er­als.

Tax dodges have been used for decades by wealthy Cana­di­ans. Most are per­mit­ted un­der na­tional tax codes. But the rev­e­la­tion that thou­sands of in­di­vid­u­als and many cor­po­ra­tions have taken ad­van­tage of off-shore tax havens has placed an un­usual spot­light on this ac­tiv­ity.

Most Cana­di­ans, es­pe­cially those of av­er­age in­comes, frown on off-shore tax avoid­ance — partly be­cause it strikes them as un­fair and im­moral, and partly be­cause the same level of tax avoid­ance just isn’t as easy to ob­tain for the av­er­age Canadian.

Off-shore tax havens are not nec­es­sar­ily il­le­gal, but the se­crecy of their ex­is­tence and op­er­a­tion im­plies the own­ers are try­ing to hide some­thing — and they cer­tainly are.

Among those found to op­er­ate such ac­counts are in­di­vid­u­als tied to the fed­eral Lib­eral party and the Trudeau gov­ern­ment.

It’s strik­ing to com­pre­hend how lit­tle of this cat-and-mouse game is avail­able to the av­er­age Canadian. In­deed, what loop­holes are avail­able are be­ing closed by Trudeau and his fi­nance min­is­ter in their in­ap­pro­pri­ately named quest for tax fair­ness.

That quest was launched two years ago when the newly-elected Trudeau cut the an­nual con­tri­bu­tion limit for tax-free sav­ings ac­counts (TFSAs). The for­mer Con­ser­va­tive gov­ern­ment had in­tro­duced TSFAs in 2009 with an orig­i­nal con­tri­bu­tion limit of $5,000, rais­ing that to $5,500, and then to $10,000. The an­nual limit was rolled back to $5,500 ef­fec­tive Jan. 1, 2016.

Trudeau sug­gested that TFSAs helped only the wealth­i­est of Cana­di­ans.

He was wrong. Ear­lier that same year, the Canadian Rev­enue Agency re­ported more than 10.7 mil­lion Cana­di­ans had opened a TFSA, and that ac­count own­er­ship spanned the eco­nomic spec­trum. In­deed, CRA statis­tics showed that 267,000 Cana­di­ans who earned less than $20,000 a year had max­i­mized their TFSA con­tri­bu­tion.

The Lib­er­als’ de­ci­sion to roll back TFSA lim­its in 2015 was po­lit­i­cally mo­ti­vated, and has de­nied av­er­age Cana­di­ans the abil­ity to bet­ter lever­age a pop­u­lar, en­tirely trans­par­ent fi­nan­cial in­stru­ment.

How the fed­eral Lib­er­als re­spond to this re­newed in­ter­est in off-shore ac­counts will be in­ter­est­ing. There will be no quick de­ci­sions, as there was for the TFSA. — Peter Epp

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