TAX AND SAVINGS IMPLICATIONS OF THE CANADIAN REGISTERED RETIREMENT SAVINGS PLANS |
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Authors: | Muhammad Rashid Devinder K Gandhi |
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Institution: | University of New Brunswick, Fredericton, New Brunswick, Canada.;Concordia University, Montreal, Quebec, Canada. On leave from the University of Ottawa, Ottawa, Canada. |
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Abstract: | This paper shows that the net effective tax rate on the Registered Retirement Savings Plans (RRSPs) in Canada has not been inflation non-neutral because of the combination of the non-neutrality of various sources of retirement income and the progressivity of the personal tax system. The paper also shows that although the RRSPs provide some tax arbitrage opportunities, these opportunities in Canada are limited due to the non-tax-deductibility of interest on mortgage and consumer credits. Finally, on theoretical grounds, the paper argues that the RRSPs may not have provided any incentives for personal savings in Canada. |
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