On the origin of species: RRSPs
By: Brent Fullard
February 1, 2010
I think a lesson in history will serve all of us well in evaluating what the income trust issue is about and the great promise that is afforded to all by the arrival of the Marshall Savings Plan, which will see the onslaught of foreign takeover of income trusts halted today, in a way in the which the Liberal Plan is presently unable to, as it would be preposterous to think Harper would embrace the Liberal Plan in Budget 2010 as a solution to the financial pandemic that he has created, in the same way the he would embrace the face saving, yet equally effective Marshall Savings Plan.
Hopefully the Liberals understand the income trust issue sufficiently well to know that it represents the complete defilement of RRSPs as they were first conceived of in 1957......by a Liberal government. Back in those days even the opposition Conservatives spoke in eloquent terms of the need for equality and fairness in providing those Canadians without pensions the same opportunities and level playing field as those with pensions.
I went to considerable trouble to dig out the debate on the second reading of the legislation that ushered in the RRSP in 1957 that was contained in that year’s budget. This material is not available on the internet. Roland Michener called that situation of unfairness as between these two groups of Canadians as an “invidious” one. Invidious meaning:
1. calculated to create ill will or resentment or give offense;
2. offensively or unfairly discriminating; injurious:
3. causing or tending to cause animosity, resentment, or envy: an invidious honor.
Do you suppose that the Conservatives of that day, not to mention the Liberals of that day, under Finance Minister Harris and Prime Minister Louis St. Laurent would find Stephen Harpers’ income splitting for seniors that only applies to those with pension income to be “invidious” or the fact that Flaherty gave the pension funds a bespoke carve-out to placate them such that pension funds can access a companies pre tax earnings and only pay one tax (38%), whereas RRSPs can not, and have to incur two taxes (62%) as being invidious?
I call upon the Liberals and all fair minded Members of Parliament to embrace the Marshall Savings Plan solution, as if it were their own (since there is no pride of authorship) and in the name of these stalwart and morally guided Members of Parliament of the past, and from all sides of the aisle, recorded for all posterity in Hansard below, knowing that The Marshall Savings Plan is a both a litmus test and an IQ test of who today’s Members of Parliament represent: Life insurance annuity salesmen and pension fund annuitants or the 75% of Canadians who simply want equality of treatment
Mr. Michener: “ This [RRSP] could affect some 400,000 taxpayers who are self employed; in fact it could go beyond that as framed because it is open to the employees who are not already contributors to an approved pension fund. I recall that my first plea on behalf of the self-employed described them as being discriminated against by the legislation as it stood in May of 1953 when Mr. Abbott was finance minister. I further believe representations have been made, perhaps over a period of ten years by different associations of self-employed persons, who find themselves in the invidious position of not being able to save for their retirement money which had not been taxed as would have been the case had they been contributing to approved plans.”
Mr. Herridge : “ Mr. Chairman this interesting [RRSP] provision will be to the advantage of possibly, I understand, half a million Canadians, mainly professional and business people. It will, I think, give those people a measure of fair play which had been denied them in the past. We feel that such a scheme is necessary if industrial workers are to have a measure of security on retirement, and the mobility which is their right in a modern democratic civilisation so that they can move from one company to another and not be chained to one area, in other words the right to full security that would be provided by such a national scheme, I think that in view of the large public investment in pension schemes - and a much greater investment still will result from the present changes to the Income Trust Act – the government has a direct responsibility for some action with respect to a national scheme in this country, I recall that last year we were told that over $30 million was lost to the federal government owing to pension schemes, and that sum will probably increase rapidly in the future. Future contributions, deductions and so on will make for even faster growth than in the past and I think that in the present occasion is a splendid opportunity for the minister, in the words of Winston Churchill, to “bring the magic of the law of averages to the rescue of millions who need it at this time.”
Mr. Harris: [on the matter of taxes being deferred under the RRSP legislation for the benefit of all Canadians, rather than simply those with pensions, or what Flaherty has whipped up in 2006 into his tax leakage tirade argument] “On the other hand, there is no question at all in my mind but that stability of income and security for the future do work out to the advantage of the taxpayers of Canada generally, because such security minimizes the number of occasions on which emergency measures might have to be taken here in order to look after persons who otherwise might have been able to look after themselves through this kind of pension program that the hon.member has in mind. I merely say this to indicate that the Minister of Finance is not disinterested about seeing that adequate security and income is provided at all times
The Deputy Chairman: “shall the resolution carry? Some hon. Members: “Carried” The Deputy Chairman: “I think that completes the paragraphs.”
For information on the invidiousnees of the income trust tax, see the comments from Canadians here: http://marshallplan.ca/
Monday, February 1, 2010
Posted by Fillibluster at 9:21 PM