Canada’s limits on immigration targets will cost billions in lost revenue over next five years: RBC report

Underlines just how much the government relied on its expansionist immigration policies that increased GDP and related tax revenues but weakened GDP per capita growth:

The federal government’s plan to scale back Canada’s annual immigration targets will lower revenues by billions of dollars over the next five years, according to a new RBC report that urges Ottawa to take a cautious approach to new spending.

Royal Bank of Canada economists Cynthia Leach and Rachel Battaglia’s release Tuesday, which looks ahead to Finance Minister Chrystia Freeland’s coming fall economic statement, says fewer immigrants will translate into lower consumption and employment growth for the economy as a whole – resulting in a significant negative impact on federal finances.

Ms. Leach, a former economist with the federal Finance Department, said in an interview that Ottawa should stay within its self-imposed targets to control the deficit and debt-to-GDP ratio.

“I do think it’s important for the government to stick to its fiscal anchors‚” she said.

Ms. Leach said the government is facing several sources of economic volatility, including the immigration changes and talk of higher tariffs from U.S. president-elect Donald Trump.

The economists project that revised immigration policies will lower federal revenues by about $50-billion over five years, which is only partly offset by a $30-billion fiscal improvement tied primarily to lower-than-anticipated interest rates. The overall fiscal landscape has worsened by about $20-billion over five years compared with the 2024 budget estimates, according to the RBC report….

Source: Canada’s limits on immigration targets will cost billions in lost revenue over next five years: RBC report