This was a plan I pitched Flaherty on in April, 2006. As a Conservative MP, I delivered to the guy a massive pre-budget report that more than 10,000 Canadians had helped me write. The after-tax savings account was one of 11 recommendations I made (and a family tax return, income-splitting for seniors, means-testing the child care payment, balanced budget legislation etc.), and I pointed out such a scheme has worked successfully in the US and the UK.

I supported the idea because it makes sense for many Canadians as a supplement to the RRSP - which is how I envisioned it, with a restriction on withdrawals before retirement. Yet the new Conservative plan allows people to take money out at any time, for any reason, which changes it from a tool to help diffuse our coming retirement time bomb to another way to fund consumer spending. That is a fatal mistake.

Here's how this kind of vehicle (called a Roth IRA in the States) works: You put money aside, up to a yearly threshold (to be $5,000), in a special account and invest it in anything you want - stocks, bonds, GICs, mutual funds etc. Any growth on that investment accumulates free of tax (like an RRSP). But (unlike an RRSP) there's no tax deduction for making the contribution. You can withdraw funds without triggering tax. Missed contributions can be made up in future years, and are not affected by the withdrawal.

In Question Period last week several Conservative MPs praised this as a financial tool that will enrich most Canadians. Examples cited - single moms who now enjoy tax-free savings growth, and young couples squirelling away for their first home. Hearing this made me very happy MPs do not give financial advice (well, most MPs, anyway).

The reality is, in almost every instance one can imagine, an RRSP is a far superior choice than the new TFSA. A single mom can get a big chunk of her income taxes back by sticking money in an RRSP, whereas she'd get nothing from a TFSA. Ditto for the young couple, who can contribute savings to an RRSP, get a big tax refund, then withdraw their RRSP money - add the refund in - and make an even larger downpayment on a house. All completely tax-free, under the Home Buyer's Plan.

Sadly, given the way Ottawa has chosen to build this thing, there is only one group of people giddy with delight at getting a new tax shelter, and that is the affluent. Since most Canadians do not have RRSPs, and since we contribute only seven per cent a year of what we are allowed, that remains the best savings vehicle. For the rich, it's another story. Those people in retirement who have accumulated money find all RRSP withdrawals are taxed at the maximum rate - no advantage to having sheltered the funds. People with good pensions (like MPs) have little use for RRSPs, for the same reason.

But for these folks, the TFSA is a fat gift. Suddenly, they can invest $5,000 a year in a tax-free account yielding capital gains, which will escape Canada Revenue Agency's icy grip. Then they can withdraw this without triggering any other tax.

The national savings rate is zero. The average Canadian owes $116 for every $100 in assets they own. Household debt has never been this high, and mortgage debt has tripled over the past decade. How is a savings plan supposed to save us, when we have no money to save? If we did have cash to set aside, we'd be smarter to do it in an RRSP, and get half back as a tax refund. Remember, $3,000 plunked into a registered retirement plan will yield up to $1,500, courtesy of your fellow taxpayers.

Think hard before you leap into this tax-free account. This one's also free of common sense.