Friday, February 12, 2010

It's RRSP Time Again!

From a post written to Challenging the Commonplace, as tax time approached a year ago...

The headline cracked me up: Study finds few eligible Canadians contribute to RRSPs.

Barely a third of Canadians who were entitled to make an RRSP contribution last year did, and the total amount contributed was only six per cent of what it could have been, Statistics Canada reported yesterday.

I've been deemed eligible to contribute to an RRSP every year since RRSPs came into being. But for the past eight years, my income has averaged $8,500 annually - that's right, $8,500 annually.

Where would anyone expect a person like me to find money to put into a RRSP; someone who, most years, doesn't even make enough to pay federal or provincial income tax?

Perhaps what's needed is for the eligibility criteria for participation in the RRSP program to be examined, rather than making it appear that taxpayers, particularly low income taxpayers, are clueless about the purported benefits of RRSPs. Said benefits do not accrue to all RRSP participants. In fact, there can be a cost for people whose household incomes are in the lowest two (of five) income categories.*

Rather than not contributing to a RRSP because they don't know any better, most low income earners are either too strapped to participate or too wise to give their hard-earned dollars to a program that benefits the more affluent at the expense of themselves.

*The CD Howe Institute study mentioned in the Times-Colonist article can be found here (PDF).


Daphne Moldowin said...

Imagine having so much money that you look for ways to preserve it from the dreaded Tax-man! RRSP's are a joke to us low income types.

Chrystal Ocean said...

Unfortunately, they're too often a joke had on us.