Debates of the Senate  
  2nd Session, 39th Parliament,Volume 144, Issue 42.
    Wednesday, March 12, 2008
Orders of the Day

Income Tax Act- Bill to Amend- Second Reading- Debate Adjourned

Hon. Wilfred P. Moore moved second reading of Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions).

The Hon. the Speaker pro tempore: Will the honourable senator take another question?

Senator Moore: Yes.

Hon. Lillian Eva Dyck: Honourable senators, I listened to Senator Moore's comments with great interest. I agree with him that education is a great equalizer in terms of bringing people up to a more equitable income level. I believe the honourable senator mentioned that close to 50 per cent of the families that will contribute to RESPs were in the bottom three tax brackets. From the way he said it, it sounded as though that might be the number of plans that are incorporated. Does the honourable senator have any data to indicate the size of the plans? Certainly, those people in lower income brackets will not be able to contribute as much as those in the higher income brackets. My concern with the bill is that those people with more money will have access to education to a greater degree than those with less money to contribute. In the Aboriginal community in Saskatchewan, for example, where people do not have much money, it will not provide much of an advantage. That is my greatest concern.

Senator Moore: I thank the honourable senator for the question. To clarify a couple of the numbers I mentioned, currently, only 27 per cent of Canadian families participate in the RESP program. As well, 44.9 per cent of the RESPs are owned by households in the bottom three tax brackets. To help give the honourable senator some comfort, as I mentioned to Senator Segal, under this program whatever a person can contribute will be deducted from their taxable income. Currently, the money contributed to an RESP is in after-tax dollars. The current program clearly favours those with more resources. This program will provide the opportunity for many more Canadians.

Senator Dyck: Perhaps I am not hearing the honourable senator's answer correctly but, in my view, lower income families will still be disadvantaged because they will not be able to contribute to the same extent as higher income families. It will depend on how much money one is able to put forward into an RESP. A lower income family will not be able to contribute and gain the tax benefit to the same degree as a higher income family. Certainly, lower income families will benefit but not to the same degree.

Senator Moore: What can I say to the honourable senator to give some encouragement here? Currently, those lower income families are probably not participating. This program will give them an opportunity and more encouragement to do so, as well as members of their family who might want to put funds toward a grandchild or a godchild's education program. There is an opportunity here. We will see what comes out of discussions at committee.

On motion of Senator Di Nino, debate adjourned.