The Investment Industry Association of Canada is calling on the federal government to deliver additional fiscal stimulus, along with steps to encourage saving and investing.

In its pre-budget submission to the House Standing Committee of Finance on Friday, the IIAC says that the global financial crisis, recession, and the likelihood of a slow recovery, leads it to conclude that policymakers should focus on reviving economic growth. “This will improve investor, consumer and business confidence, contribute to the functioning of capital markets, and improve Canadians’ prospects for a sound retirement,” it says.

In particular, the IIAC calls on the committee to lower the capital gains tax, introduce a new pension allowance, eliminate RRIF withdrawal minimums, and bolster credit facilities that were unveiled in the last budget.

On the capital gains tax, it recommends lowering the tax rate by reducing, or eliminating the 50% inclusion rate. “A reduction in capital gains tax would result in additional risk capital, lead to further business and job creation, enhance productivity and economic activity and overall wealth creation and prosperity for Canadians,” it argues.

The IIAC also calls on the committee to introduce a defined tax-assisted lifetime pension allowance. “The introduction of a defined lifetime pension allowance would give investors flexibility to recoup market losses in their portfolios, and could be supplemented by allowing retroactive contributions to TFSAs,” it says. “Additionally, to ensure that older Canadians receive the benefit of maximum flexibility to manage their portfolios efficiently, we recommend the removal of minimum annual withdrawal limits from RRIFs for Canadians over the age of 71.”

Finally, the group recommends that current credit facilities for insured mortgages and asset-backed securities that were introduced in the last federal budget should be expanded. “These initiatives have been effective in improving the functioning of domestic credit markets generally,” it says. “However, certain segments of the market continue to function sub-optimally, most notably the securitization market. Additional attention should therefore be devoted to initiatives undertaken by the federal government to ensure that businesses can access capital quickly and at a reasonable cost and intermediaries can continue to maintain adequate two-way markets for buying and selling securities.”