Caddell: Is immigration the next Ottawa-Quebec battle?

Captures the demographic dilemma facing Quebec in relation to the rest of Canada, even if I question the “more is merrier” approach of the Canadian and provincial governments:

In 1960, Kamouraska was home to 2,000 people. The baby boom was at its peak, there were dozens of dairy farms, and tourism created summer jobs. Today, there are fewer than 600 permanent residents, and while a tourist mecca in summer, it is quiet in the winter. There are many elderly, few young families, and fewer farms. This summer, as everywhere in Canada, employers were desperate to find employees.  

In other provinces, the solution to declining birth rates and labour shortages is immigration. And as the 2021 census indicated, population growth has been due to immigration. Hence the announcement Ottawa would increase the threshold to 500,000 new arrivals annually. 

This number is double what the Harper government sought and is in line with analysts like Doug Saunders, author of Maximum Canada, who believe Canada can sustain a population of 100 million people. 

However, in Quebec, the announcement was greeted with caution. Premier François Legault has warned of the “threat to French” of immigration and refused to raise Quebec’s share from 50,000 to 25 per cent of the national total: 125,000. Last week, Legault said, “We have to find a way, in the 50,000, to have more of them who speak French.”

This is a rejection of the strategy of the Charter of the French Language, Bill 101. In the 1970s, Premier René Lévesque and the father of Bill 101, Camille Laurin, told me the language law’s obligation for immigrants to attend French schools was the solution to declining Francophone birthrates. 

Today, however, non-Francophone immigrants are perceived as a problem. While fluent in French, some speak their mother tongue at home, and many also speak English. This trilingualism, rather than a huge asset, is interpreted by nationalist demographers and pundits as a “decline” in French. Speaking the language is not good enough: immigrants now must be mother-tongue French.  

But much of the Francophonie is found in Muslim Africa. Under the secularism law, Bill 21, practicing Muslims can’t work as teachers, police officers, or in the courts. Two weeks ago, an African driver was handcuffed and detained by Montreal police, for no reason. These are not signs of a welcoming society; one commentator says Legault’s preferred immigrant is “a white millionaire from France.” 

Quebec’s chattering classes are predicting immigration will be the next confrontation between Ottawa and Quebec. Premier Legault wants immigration powers to create his Francophone “nation.” This would mean an expansion of Quebec’s presence abroad, and immigrants applying as if Quebec were a sovereign state.  

As it is, that is how Quebec interprets itself to aspiring immigrants, according to a booklet provided to them. 

The booklet, upon which an online assessment is based, declares “Québec is a French-speaking democratic nation that welcomes immigrants from around the world.” It points out: “Québec society has also made French the language of Government and the Law, as well as the everyday language of work, education … and business.”  

All of which is untrue, as English is constitutionally guaranteed in the courts, there are three English universities, and 1.25 million Anglophone Quebecers. The booklet goes on: “As a state, Québec differs from other provinces in Canada, notably with respect to the impetus of popular will.” Furthermore, the Crown does not exist: “The Lieutenant Governor does not have a seat in the National Assembly, but assents to bills the legislature passes.” The federal government is brushed off as running “military defence, foreign policy and criminal law.” A grade nine student would get an “F” for an essay like this booklet. 

Quebec’s population is 8.6 million people. With a huge influx of immigrants in the rest of the country and reductions in Quebec, it is bound to become a smaller proportion of Canada’s population. 

This offers a “Hobson’s choice” for Quebec nationalists: accept new immigrants as equal to “old stock Québécois,” or shrink to a tiny fraction of the continent. The business community desperately wants the population and the economy to grow, and they see trilingualism is an asset internationally, especially in cosmopolitan Montreal. 

By restricting immigration, Legault’s short-sighted vision is a Quebec “nation” that’s North America’s Finland: a tiny homogenous population in a massive territory. It is yet another example of how nationalism could be suicidal for Quebec and the French fact in Canada. 

Source: Is immigration the next Ottawa-Quebec battle?

Canada needs to start taxing Canadians who live abroad

Working on a piece analyzing the issue of citizenship-based versus residency-based taxation, given this opinion piece by Chandra Arya, Liberal MP for Nepean.

His arguments are largely based on anecdote rather than available evidence, he fails to question by the USA is an outlier on citizenship-based taxation compared to other OECD countries, and understates the policy and administrative complexities involved in making such a change.

As always, people cite the Asia Pacific Foundation number of three million expatriates without controlling for age and citizenship. Doing so results in about two million expatriates:

It is time for Canada to adopt citizenship-based taxation (CBT).

While we don’t have complete information on where Canadians have taken up long-term residence abroad, there are reports of about 300,000 Canadian citizens in Hong Kong and tens of thousands in each of several countries in the Middle East. From Asia to Africa, from Europe to the Caribbean and South America and, of course, the US, significant numbers of Canadians have made their permanent home away from Canada. There were about 3 million Canadians abroad, including tourists, at the start of the COVID-19 crisis, according to the Prime Minister.

Currently, Canadian income tax obligations are based on residency status and not on citizenship or immigration status, so non-resident Canadians do not pay taxes. However, expatriate Canadians enjoy the same rights as Canadians who are resident here. They should face the same obligations as resident Canadians, including paying taxes, so that they share the responsibility of contributing, at least financially, to our country.

The United States is the only developed country that taxes its citizens on their global income irrespective of where they live or how long they have lived outside of the US. The constitutional validity of CBT has not been tested in Canada, but the 1924 US Supreme Court decision in the case of Cook v. Tait offers cogent reasoning about CBT that shows its validity under the US constitution. The decision relied on the inherent benefits received by US citizens and their property from the US government, regardless of where the citizens made their home or where their property was located.

Michael S. Kirsch of  the University of Notre Dame, in his seminal 2007 article “Taxing Citizens in a Global Economy,” argues for the same principle. Kirsch suggests that recent globalization trends strengthen, rather than weaken, the case for taxing US citizens living abroad. He concludes that modern advances in transportation and communication weaken the case for giving preferential treatment to income earned by citizens working abroad, in that these developments afford the expatriate US citizen virtually the same rights as that of a resident US citizen, such as personal protection, property protection, the right to vote and the right to enter.

The same can be said of expatriate Canadians. They are assured of guaranteed access to a safe, secure and stable society, virtually free world-class health care and education systems and, depending on income levels, affordable housing, irrespective of their length of stay (or lack thereof) in Canada. In addition, depending on the time spent in Canada, financial supports like Old Age Security and the Guaranteed Income Supplement are available to them. Anecdotal evidence suggests citizens are returning to Canada to enjoy these benefits after spending their productive lives elsewhere. This is a significant contingent liability for Canada, because citizenship — not contribution (or lack thereof) to our society — is the criterion for benefits and support.

Kirsch also discusses the need to maintain the cohesion of a society. In the absence of citizenship-based taxation, there is a strong tax-driven incentive for a not insignificant number of high-income and high-net-worth individuals to establish tax residence abroad in order to avoid income taxes. The creation of a separate class of citizens could have corrosive effects on broader society, just as it has done in other countries that rely only on residence-based taxation.

A Canadian passport facilitates visa-free travel and increased international mobility — and serves as a plan B, allowing these global citizens to return here when things get rough elsewhere.

There was a time when most immigrants to Canada came here to become citizens and settle permanently. Now, for a small but growing number, the objective is to acquire citizenship and leave again. A Canadian passport facilitates visa-free travel and increased international mobility — and serves as a plan B, allowing these global citizens to return here when things get rough elsewhere. But without CBT, they don’t help to finance the society they are counting on as a safe harbour.

There are also budgetary considerations underlying the adoption of a CBT system. Before the COVID-19 crisis, our economy was in great shape and able to generate sufficient government revenues to maintain a comfortable federal debt-to-GDP ratio of about 30 percent. Now we are in another world altogether. We are going to have the biggest budget deficit in the history of Canada, thanks to the biggest bailout packages ever for millions of Canadians and businesses. The public debt may exceed all previous peaks. While it is always optimal for a country to have an expanding tax base that is able to fund social programs and services or investments in infrastructure, defence and economic development, it has now become a necessity. With CBT, the tax base would include many more new taxpayers.

Changes to demographics, particularly the greying of our society, will only accentuate the need for higher government revenues, as these changes will result in substantial growth in demand for social services. Volatile global situations will increase the number of Canadians returning to safety (financial, health and/or physical) in Canada, also boosting the demand for government services.

One revenue option to meet these demands is to increase direct or indirect tax rates. The alternative is to shrink spending. Canadians seem to have no appetite for either of these options, especially in the current crisis. The Liberals in the recent past have raised taxes on the wealthy. But there is a limit to this approach.

The only viable alternative for enlarging the revenue stream in order to maintain adequate service delivery to citizens is to expand the taxpayer base. This is why the idea of CBT is so appealing. The government should examine CBT’s feasibility, including the potential contingent liability and revenue, plus enforcement and international tax agreement issues. The financial burden and responsibility of meeting the needs of all Canadians should be shared by all citizens. It is the equitable thing to do.

Source: Canada needs to start taxing Canadians who live abroad

Andrew Caddell, in his overview Opinion: The post-COVID Canada faces many challenges The post-COVID Canada faces many challenge includes a throwaway line which is completely silent on these complexities:

Governments will have to get out of debt without crushing the economy, or Canadians. This will require creative ways of raising taxes. One possibility would be a two per cent increase in the GST to seven per cent: that would generate $90-billion over five years. Second, the three million Canadians abroad should contribute, through a 10 per cent tax on income; that could bring in at least $30-billion per year. Third, tax havens for Canada’s wealthiest have to be closed, and that money taxed.