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Finance Minister Jim Flaherty holds a news conference in Ottawa on Jan. 27, 2014.

FRED CHARTRAND/The Canadian Press

The Conservative government is scrapping Canada's decades-old immigrant investor program in the 2014 budget, ending a path to citizenship that has been criticized for allowing foreigners to buy their way into this country without generating sufficient long-term benefit.

The federal government, which stopped accepting new applications from foreign investors in 2012, has concluded the program is not reaping sufficient economic return for Canada, sources say.

The program, founded in 1986, has been primarily used by Chinese immigrants – from Hong Kong, Taiwan and mainland China. Key drivers included upheaval after the crackdown in Tiananmen Square in 1989, the 1997 handover of Hong Kong to Beijing, and the growth of the millionaire class in mainland China.

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Finance Minister Jim Flaherty will unveil his budget on Tuesday, a final restraint package that favours minimal cost measures as the Conservatives set the stage to balance Ottawa's books in 2015, an election year in which they hope to have surplus cash to dangle new tax cuts before voters.

It will also take aim at the gap between the sticker price of consumer goods in Canada and the United States. It will legislate against "country pricing" – a policy in which multinational companies charge higher prices in Canada and cite reasons such as the vast geography.

The economic plan will also pour more money into skills training for Canadians and free up cash for major infrastructure projects – job-creating initiatives that will serve Prime Minister Stephen Harper's Tories well as they prepare to fight another federal election in 2015.

Sources said the budget will also include money for Canada's auto sector to keep jobs in Canada – a measure that comes as Chrysler asks the federal and Ontario governments for subsidies for a Windsor, Ont., minivan plant.

"Our government launched an Automotive Innovation Fund in the past to help support the automotive industry's growth and to promote a sector that creates jobs across the country. We will continue to invest in this important sector," a government source said.

The Conservatives, who undertook major immigration reforms to attract skilled immigrants, and made no secret of their distaste for "Canadians of convenience" who seek citizenship but live abroad, consider the investor program a relic of a different era.

The program grants permanent residency to newcomers who make an interest-free loan to a provincial or territorial government, money that is supposed to be used for economic development.

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Sources say the government believes the immigrant investor class pays significantly less in taxes over the decades than other economic immigrants, have less proficiency in English or French and are less likely actually to reside in Canada.

A source said the government is acting based on data that show that, 20 years after arriving in Canada, an immigrant investor has paid about $200,000 less in taxes than a newcomer who came in under the federal skilled worker program, and almost $100,000 less than one who was a live-in caregiver.

In the past 28 years, more than 130,000 people have come to Canada under the investor program, including applicants and their families.

The Conservatives feel newer economic-immigrant programs are doing a better job of attracting newcomers who will integrate well into Canadian society and build the economic base.

These include the Canadian Experience Class, which fast-tracks residency for temporary foreign workers already in Canada and non-Canadians who have graduated from universities and colleges here.

In recent years, Canada has admitted about 3,000 immigrant investors a year through the federal program – 11,000 when spouses and dependents are included. Largely from China, Taiwan and South Korea, these newcomers' primary destinations are Ontario and British Columbia.

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Federal and provincial immigration department data obtained by Vancouver immigration lawyer Richard Kurland revealed this week that about 45,000 wealthy Chinese alone are on the immigrant investor program's waiting list and want to move to British Columbia.

Those on the waiting list after the federal investor immigrant program is scrapped will have to apply through other programs.

Sources say that scrapping this category will allow in more newcomers through other economic immigrant categories, including the new Startup Visa program, which offers permanent residency to immigrant entrepreneurs who can secure funding from Canadian investors.

When he was immigration minister, Jason Kenney complained in 2012 that the cash brought in by immigrant investors frequently sits idle on provincial government balance sheets rather than stimulating the economy.

"Right now, all Canada gets from the investor immigrant program is five years of use of about $750,000," Mr. Kenney said in 2012. "That's the $800,000 contribution minus commissions and fees. … It basically means that provincial governments that are getting that money are offsetting their debt service costs."

Editor's note: An earlier version of this story incorrectly stated that the handover of Hong Kong to China took place in 1999. This version has been corrected.

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