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

Abstract

This paper examines the net fiscal transfers to recent immigrants to Canada resulting from taxes and transfer programs as revealed in the Statistics Canada Census 2006 Public Use Microdata File (PUMF). It calculates that recent immigrants (defined as arriving between 1990 and 2004) on average only paid about half as much income tax as native Canadians in 2005 ($4,172.69 per capita compared to $8,130.82). The most recent cohort of immigrants from 2000 to 2004 paid only 40 per cent as much income tax as native Canadians. And even the cohort that immigrated from 1990 to 1994 still are only paying 60 per cent as much income tax per capita as native Canadians. The reason for the lower income tax paid is the lower level of total income. There does not seem to be disproportionate transfer payments to recent immigrants yet as most have not been in the country long enough to qualify for government pensions. But excluding government pensions, and 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.