Why more immigration could keep taxes lower

Syrian refugees are greeted by Prime Minister Justin Trudeau on their arrival from Beirut at the Toronto Pearson International Airport in Mississauga, Ontario, Canada December 11, 2015. REUTERS/Mark Blinch

Canada needs to set ambitious immigration targets in the coming years to keep the country on a path to economic prosperity.

According to a new report by Century Initiative (CI), those targets need to help get the population up to 100 million Canadians by 2100.

CI points to labour shortages in parts of the country, leaving half a million jobs unfilled as the national unemployment rate hit a 44-year low.

“Those effects slow the economy, reducing tax revenues that governments require for infrastructure building, social programs and services, from pensions to policing,” reads the report.

“Diminished government revenues mean higher taxes or cuts to services – or both.”

The federal government’s current immigration target for 2022 is 350,000. CI says that should be bumped up to 400,000.

The recommendation jumps to 420,000 in 2023, 450,000 in 2024, and 475,000 in 2025.

“A larger population is key for the economic prosperity that makes possible what we value, from high-quality health care and education to income security programs, cultural vibrancy and a healthy environment,” reads the report.

“We realize that active measures to increase Canada’s scale will run into the headwinds of current countervailing political forces that reflect a more skeptical public mood.”

CI notes that if the status quo is maintained, GDP growth is expected to slow to 1.5 per cent from 2050 to 2100. That’s a far cry from the 2.8 per cent average over the last 50 years.

The need for increased immigration is magnified by a rapidly aging population. The average life expectancy has gone from 71 in the 1960s to 82.5 today.

There’s also the matter of a rapidly declining fertility rate. In 1960, women had an average of 3.9 children, compared to 1.54 today.

“We urge Canadian governments to pursue more ambitious child care and parental leave policies that would benefit couples who want bigger families, while also making it easier for mothers to rejoin the workforce when they’re ready,” reads the report.

To help spur economic growth, CI has eight other recommendations.

  • Leverage under-represented talent in the labour force

  • Build infrastructure to accommodate a larger population

  • Develop greater density in mega-regions

  • Look to expand in the near and far North

  • Invest in a globally ranked education system that’s a magnet for talent

  • Attract and develop talent with skills for the digital age

  • Scale innovation and entrepreneurship

  • Educate Canadians on the economic case for immigration

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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