The Investment Industry Association of Canada is calling on the federal government to balance the budget with lower spending, not higher taxes. The industry group also wants Ottawa to reform retirement savings programs.

In its pre-budget submission published Friday, the IIAC recommends that the government include “a clear plan for reducing the federal deficit over the medium term, with the emphasis on fiscal restraint and reduced spending rather than tax increases” in its forthcoming budget.

Indeed, it calls for lowering the capital gains tax on common shares, arguing that “Canada’s current framework for capital gains tax is an impediment to accessing risk capital for productive investment. Policy should introduce modest capital gains tax relief to provide support to the capital-raising process.”

In terms of the retirement savings system, the IIAC indicates that the system is working well overall, but that “there is evidence that not all Canadians are saving enough to meet income replacement needs during retirement and more analysis should be conducted to understand this phenomenon before initiating any major policy changes.”

Yet, if the government is contemplating changes, the IIAC calls on it to provide more room for tax-assisted savings via RRSPs and TFSAs. In particular, it recommends that older Canadians be permitted to make retroactive contributions to TFSA accounts, and it calls for the removal of minimum annual withdrawal limits from RRIFs for Canadians over the age of 71.

Additionally, it suggests that the government consider establishing direct lending programs, such as those available through existing BDC programs, or a tailored securitization solution, to assist smaller issuers; and it reiterates support for a single securities regulator.

IE