The tax-free savings account (TFSA), introduced in 2009, was intended by the Canadian government to provide an alternative catchment for savings in addition to registered retirement savings plans (RRSPs). However, little empirical evidence exists regarding the impact of saving in TFSAs on saving in RRSPs. To investigate this issue, we conduct empirical analysis, using data from Statistics Canada's Longitudinal Administrative Databank, which contains annual TFSA and RRSP contributions for a sample of 20 percent of all Canadian taxfilers. We find evidence of a displacement effect of TFSAs on RRSPs: every 1 percent increase in a TFSA contribution reduces an RRSP contribution by approximately 0.4 percent. Our findings have implications for Canadians' ability to self-fund their retirement, as well as for the Canadian government's ability to generate future tax revenues.
Guilt is a powerful emotion that is known to influence ethical decision-making. Nevertheless, the role of guilt cognitions in influencing restorative behaviour following an unethical action is not well understood. Guilt cognitions are interrelated beliefs about an individual's role in a negative event. We experimentally investigate the joint impact of three guilt cognitions-responsibility for a decision, justification for a decision, and foreseeability of consequences-on a taxpayer's decision to make a tax amnesty disclosure. Tax amnesties encourage delinquent taxpayers to self-correct to avoid severe penalties that would result if their tax evasion were discovered. Our findings suggest a three-way interaction effect such that taxpayers are likely to make tax amnesty disclosures when they foresee that they will be caught by the tax authority, unless they can diffuse responsibility for their evasion and justify their evasion. Implications for tax policy and tax professionals are discussed.
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