Brian Anonymous
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Poverty Becomes Cyclical in Canada

We're supposed to be progressive. How'd we get stuck in a rut?

The old saying is the rich get richer and the poor get poorer. I reflected on this in my everyday life and realized the privilege that people experience when they have money. The options are greater and there's room for making mistakes. 

In Canada, there are multiple ways of saving money including a tax-free savings account (TFSA), and registered retirement savings plans (RRSP). They're both great ways of saving but you have to have money in order to actually save. How is the government helping people in poverty when only middle-class citizens can take advantage of these savings. What kind of benefits do people get out of this? 

First TFSAs are non-taxable. People can have TFSAs in not just a regular savings account but in mutual funds and exchange-traded funds (ETF). What's the big deal? Well, like I mentioned earlier, if you have money you can take risks. These funds can substantially increase. Since they are considered TFSAs, they become tax-free! Every year we accumulate 5,500 dollars worth of space for TFSAs. The program has been running since 2009. As of today, anyone that was here since 2009 has a TFSA allotment cushion of $57,500! Tell me that people living paycheck to paycheck can take advantage of that... 

Next, we go to RRSPs. There are a few benefits to this program. Firstly, if you place a large sum into RRSPs they can lower your income bracket resulting in a lower income tax percentage. On top of this, if you're buying your first home, you can withdraw a large sum of RRSPs with no penalties and place it into a down payment for your house. Who has the money to buy houses let alone enough money in RRSPs to make it worthwhile? The last benefit of RRSP is that you start withdrawing the amount when you're retired and when you're retired you are at a lower tax bracket so again, you pay fewer taxes. 

Some tax issues not a lot of people consider are tax on used cars! Who are the people buying used cars? Certainly not the ones well off. The car was already taxed initially when it was first purchased as a new car. If the car gets sold multiple times, the tax on that car becomes cumulatively significant! Why burden people that can't afford a new car? 

Speaking of cars, there's also licenses, certification etc. Yes, I know that one can argue that driving is a luxury. Driving can actually increase your day-to-day productivity in life. Public transportation can be very daunting for people, as it drastically reduces the amount of time someone can use in a day. This can be particularly hard for those that need to have multiple jobs or work and go to school at the same time. 

Driving schools aren't cheap and yet, if you go to one, your insurance rates will go down. It makes sense but what about those that can't afford the lessons? 

What if a driver makes mistakes such as parking tickets, speeding tickets, etc? This could ruin someone that's getting by paycheck to paycheck. People that don't have much sometimes have to live a routine life and this might take them a while to get back into their groove. 

These are just a few of the examples that came to mind. It makes me have such a huge appreciation for the stories I hear about people overcoming poverty and becoming successful. They knew how to overcome their mistakes and not allow anything to get in their way. They have fewer options so they are ultra-focused. These people are true inspirations!