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The Canadian tax-free savings account: a programme to help the rich get richer?

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  • Belayet Hossain
  • Laura Lamb

Abstract

This article examines participation in the Canadian tax-free savings account (TFSA), implemented in 2009, and its potential impact on wealth inequality in Canada. Data from the 2012 Survey of Financial Security is used to estimate probit, tobit and Heckman probit selection models to test the hypothesis that high-income earners and wealth holders are the most likely recipients of the benefits associated with the TFSA. Empirical results highlight the significance of net worth as a key determinant of both participation in and contribution levels of the TFSA. The results are expected to be relevant to public policy-makers concerned with reducing inequality and those endeavouring to encourage savings for all socio-economic groups.

Suggested Citation

  • Belayet Hossain & Laura Lamb, 2016. "The Canadian tax-free savings account: a programme to help the rich get richer?," Applied Economics Letters, Taylor & Francis Journals, vol. 23(10), pages 728-731, July.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:10:p:728-731
    DOI: 10.1080/13504851.2015.1102840
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