Drawing Down Our Savings: The Prospects for RRIF Holders Following the 2015 Federal Budget

Abstract

In stitut C.D. HOWE In stitute Essential Policy Intelligence | Conseils indispensables sur les politiques Most Canadians will rely on tax-deferred savings to finance a substantial share of their postretirement living expenses. Some are in defined-benefit and target-benefit pension plans, which promise benefits until they die. The majority, however, are in capital accumulation plans (CAPs), such as Registered Retirement Saving Plans (RRSPs) and defined-contribution (DC) pension plans. This E-Brief updates and extends previous work by Robson (2008) and Robson and Laurin (2014). We thank Jamie Golombek, Barry Gros, Malcolm Hamilton, Moshe Milevsky, James Pierlot, and members of the C.D. Howe Institute's Pension Policy Council for their comments and suggestions on prior drafts. We retain responsibility for any errors and the views expressed here.

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“…On a static basis, this change initially would reduce federal revenues by $3.8 billion annually. As investors and business managers responded positively, however, the base for the corporate income tax would expand, reducing the impact over time (Robson and Laurin 2019).…”

“…The Shadow Budget would abolish federal excise taxes on aviation fuel. They are inferior to valueadded taxes such as the goods and services tax (GST) because they tax an intermediate input, thus raising costs throughout the economy and making Canadian exports less competitive (Robson and Laurin 2019). Aviation fuel would be subject to the same higher GST rate that would apply to other motive fuels (as we outline below), with rebates through the same invoice-credit system that relieves intermediate users of tax.…”

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