Is Canadian Immigration too high? A Labour Market and Productivity Perspective

This paper presents some of the economic considerations that should underlie Canadian immigration policy from the point of view of an economist. It then reviews the available data on the performance of recent immigrants against this backdrop. It also offers some observations on the changes in the Immigration and Refugee Protection Act contained in Bill C-50, the Budget Implementation Act, 2008. Finally, it concludes with some suggestions for the conduct of an immigration policy that would be based more on Canada’s economic interests and that would establish a lower annual target for immigration more consistent with Canada’s absorptive capacity

Overview of the Festschrift

Festschrift literally means “celebration-writing” in German. And that is what this volume is. It celebrates the remarkable career of David Slater, which in the best Queen’s University tradition of John Deutsch and Clifford Clark spanned academia and public service, on the occasion of his 80th birthday. It follows an old academic tradition that at an appropriate stage in the career of an eminent scholar a volume be put together in their honour containing the writings of colleagues. Usually, the writings must have something to do with the scholar’s life work. In David Slater’s case, this was an easy task as his research and interests have been omnivorous. Finding contributors was also easy as over David’s long career he had many colleagues, friends and students who jumped at the chance to honour him and to participate in this endeavour. The topics covered by the papers in this volume include: fiscal federalism, taxation, pensions, international economics, globalization, regional issues, environmental economics, and labour economics. This overview provides a brief summary of each paper.fiscal federalism, taxation, pensions, international economics, globalization, regional issues, environmental economics, labour economics, David Slater

Some Observations on Net Fiscal Transfers to Recent Immigrants Resulting From Income Taxes and Government Transfer Programs

This paper utilizes the comprehensive data on income taxes paid by immigrants and others and the government transfer payments received by immigrants and others provided by the 2006 Census from income tax statistics. The Census data was recently made available to researchers in the 2006 Census PublicUse Microdata File (PUMF), which contains 844,476 records, presenting census data on individuals representing 2.7 per cent of the Canadian population. The analysis revealed that recent immigrants on average only paid about half as much income tax as native Canadians ($4,172.69 per capita compared to$8,130.82). It also showed that the most recent cohort of immigrants from 2000 to 2004 paid only 40 per cent as much income tax as native Canadians. In the Other Government Transfer Income category, which is a catch-all for “all transfer payments, excluding those covered as a separate income source (child benefits, old age security pensions and guaranteed income supplements, Canada or Quebec Pension Plan benefits and employment insurance benefits) received from federal, provincial, territorial or municipal programs,immigrants received per capita amounts in 2005 that are $13.05 less than nonimmigrants so there is no prima facie evidence of disproportionate reliance on social assistance from the Census. The one area where recent immigrants got a disproportionate share of government transfers is child benefits. This reflects their larger number of dependent children, which could be a result of their lower average age or greater proclivity to have children. On the other hand, recent immigrants received a lower per capita amount of employment insurance benefits. This could reflect their tendency to locate in areas with stricter eligibility requirements for EI such as the TorontoMetropolitan Region in 2005. Taking into account Other Government Transfer Income,Child Benefits and Employment Insurance, recent immigrants received$346.15 more per capita from Government Transfers than non-immigrants. In total, this would amount to $534 million, an amount that is small in relation to the fiscal transfer resulting from lower per capita income taxes paid.tax paid by immigrants, transfer payments paid to immigrants

The impact of immigration on Canada’s labour market

This paper discusses the performance of recent immigrants in Canada's labour market and reviews some of the literature on the causes of their poor performance. The paper concludes that, using the existing selection system, it is not possible to admit annually as many as 250,000 immigrants who are capable of doing well in the Canadian labour market, despite 16 years of economic expansion, during which the unemployment rate dropped below 6%. It also speculates that The situation can only worsen as unemployment climbs, as the economy slackens.immigration to Canada, labour market, labour market performance of recent immigrants

Ontario NDP Tax Increases

This paper uses Statistics Canada's Social Policy Simulation Database and Model to provide estimates of the cumulative magnitude and distributional impact in 1993 of the tax increases introduced by the NDP government in Ontario in their three budgets after coming to office in 1990. It finds that the Ontario NDP tax changes have increased the tax burden on the Ontario household sector by almost $3 billion and have raised the average taxes paid by an Ontario family by$663. The tax increases are progressive up the income scale. Upper income families earning over $150,000 bear the heaviest tax increases of$6,811 per family. The vast majority of Ontarions,including even low and particularly middle income earners,face substantial tax increases. The only group sheltered is the low-income group who benefit from the greater targeting of property and sales tax assistance for seniors.distributional analysis, tax increases, Ontario

The Challenges of Complying with the Kyoto Protocol

This paper examines the evidence on the economic impact on Canada of complying with its commitment to reduce Greenhouse Gases by 6 per cent from 1990 levels under the Kyoto Protocol. It concludes that this would be extremely burdensome given the diverging trends of GHG emissions and the targets. And it notes that Canada may have no option other than to give the required notice under the UN Framework Convention on Climate Change that it is withdrawing from the Kyoto Protocol.Kyoto Protocol, Greenhouse Gas Emissions, Economic Impact, UN Framework Convention on Climate Change

A More Open and Secure Border for Trade, Investment and People

Canadian prosperity critically depends on the maintenance of an open and secure border between Canada and the United States. Even though the border was reopened quickly following the September 11th attacks, it was not the same as it had been. The new mantra became "security trumps trade" because of US concerns to prevent another terrorist attack. And Canadian exports to the United States have stagnated since September 11. The Canadian Government definitely needs to tackle the problems created by the thickening of the border head on by preparing an ambitious and far-sighted proposal for an open and secure border that addresses legitimate US security concerns, but eliminates all the unnecessary red tape that has been bottlenecking the border. This paper offers concrete suggestions for improving the flow of goods,services, people and investment without sacrificing security.Canada-U.S. border, Canada-U.S. trade, border security,

The Distributional Impact of the Federal Tax and Transfer Changes Introduced Since 1984

This article reports on the results of an analysis of the distributional impact in 1990 of the federal tax and transfer changes introduced by the Canadian government from the time of its election in 1984 through the announcement of its February 1990 budget. The analysis uses Statistics Canada's Social Policy Simulation Database and Model (SPSD/M). The analysis measures the distributional impact of the federal tax and transfer changes since 1984 by comparing the federal tax and transfer system that will actually be in place in 1990 with the system that would be in place if the 1984 tax and transfer legislation were still in effect, with full indexation through 1990 of exemptions, deductions, and rate brackets. The analysis fully reflects all of the federal tax and transfer changes introduced in the 1985, 1986, 1987, 1988, and 1989 budgets and in the 1988 tax reform. There were no significant tax or transfer changes in the February 1990 budget. The analysis indicates that in 1990 Canadian households will pay a total of about $11.1 billion more in federal taxes net of transfers than they would pay if the 1984 tax system were still in effect. Increases in net federal income tax account for only$0.9 billion of this total. Federal surtaxes, which account for $3.2 billion, and increases in federal commodity taxes, which account for$6.1 billion, are by far the most important contributors to the increasing net tax burden of the personal sector. The additional net tax burden borne by an average Canadian family in 1990 will be about $1,000. Of the 11.1 million census families in Canada, 9.5 million (85 percent) will face higher federal taxes net of transfer than they would face under an extension of the 1984 tax system. Only 1.5 million (13 percent) will face lower federal taxes net of transfers. The tax and transfer changes introduced are very progressive in the aggregate for families that earn less than$35,000 per year and roughly proportional for families that earn between $35,000 and$75,000. The tax changes become moderately regressive in the $75,000 to$1 50,000 range and severely regressive over $150,000. It is clear that middle-income families, particularly those with children, have borne the brunt of the recent tax increases. Families in the highest income categories have received a less than proportionate share of the increased tax burden, and families with children in the lowest income categories have actually enjoyed tax cuts as a result of the tax and transfer changes introduced since 1984. Given the size of the federal deficit, further tax increases are inevitable, and the distribution of the growing tax burden must be equitable. Distributional analysis performed with the SPSD/M, of the kind presented in this article, can help to ensure that the public is aware of the distributional impact of proposed tax changes.tax and transfer changes, distributional impact

Immigration and the Growing Canada-U.S. Productivity Gap

This paper examines the impact of immigration on labour productivity in Canada. Immigration is a factor that has been largely ignored in the literature on Canadian productivity growth. A simplified growth accounting approach is utilized to estimate the reduction in labour productivity in Canada (as measured by GDP per worker) that can be attributed to the poor performance of post-1990 cohorts of immigrants in the labour market (as measured by average earnings as reported in the 2006 census). It is estimated that immigration accounts for 2.23 percentage points, or about a fifth, of the 10.96 percentage point post-1990 increase in the Canada-US labour productivity gap.productivity, recent immigrants to Canada, immigration policy, immigrant labour, human capital

A Separate Personal Income Tax Collection System For Alberta: Advantages and Disadvantages

The Province of Alberta has been a participant in the Tax Collection Agreements (TCAs) with the Federal Government covering the personal income tax since their inception in 1962. Under the terms of this agreement, the Federal Government undertakes to collect the Alberta personal income tax at no charge provided that the Government of Alberta agrees to levy its tax within a commonly agreed framework. This paper provides an assessment of the overall advantages and disadvantages for Alberta of participating in the Tax Collection Agreement for personal income tax. Its overall conclusion is that TCAs have worked very well in enabling Canadian governments to achieve their shared tax policy objective, while at the same time reducing tax complexity, duplication and cost, and promoting tax harmony. And the new more flexible TCA framework with its tax-on-income option, the TCAs should work even better and be able to accommodate the legitimate tax policy objectives of provincial governments that were constrained by the old TCA, which required provinces to levy taxes on the federal basic tax rather than the tax base.personal income taxation in Canada, Tax Collection Agreement, Canadian Federal-Provincial Fiscal Arrangments