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The president of the Canadian Medical Association has warned the federal government that the 2024 budget “jeopardizes the stability of our struggling health care system.”
Dr. Kathleen Ross said the budget's new tax regime “undermines the well-being of health care professionals.”
The new system will tax the profits – capital gains – made on the sale of assets at a rate of two-thirds, rather than the current one-half. For corporations, this will apply to all capital gains, while for individuals it will apply to annual gains of over $250,000.
Doctors across Canada “now find themselves confronted with the prospect of increased financial strain,” she said, adding that the tax tweaks “will have adverse effects on physician recruitment and retention across the country.”
“While we support the health care investments announced by the federal government last week, proposed changes to the capital gains inclusion rates will have significant negative implications for physicians as most operate their practice as a small business,” she wrote in a statement made on behalf of her association.
Photo credit: Government of Canada
Finance Minister Chrystia Freeland being applauded by her fellow Liberals after announcing the new budget.
“These changes could jeopardize ongoing efforts across Canada to recruit and retain a high-quality health workforce.”
The federal government has argued the tax changes will create a “more fair” system, while Prime Minister Justin Trudeau has said he wants “to make sure the economy is fair for everyone.”
Speaking last week, Trudeau was defiant in the face of Tory criticisms of the budget, saying: “Conservatives have already said they’re voting against this budget – they’re voting against fairness, they will be voting against asking the ultra-rich to pay their share.”
But Dr. Ross said the new system makes it harder for doctors to “plan and save for retirement.”
“This not only undermines the well-being of health care professionals, it jeopardizes the stability of our struggling health care system,” she argued. “The risk of already over-stretched physicians leaving the profession or reducing their hours in response to heightened taxation is real.”
She said many community-based doctors have incorporated their practices “as a means of efficiently delivering health services to Canadas.”
“They also rely on their professional corporations as a means of saving for retirement since most do not have access to employer retirement plans,” she went on.
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“Increasing the capital gains inclusion rate for corporations will create another barrier to retaining and recruiting physicians in a time when our health system and the providers within it are already under constant strain.”
She added: “Our health system and the people who work tirelessly to prop it up cannot withstand yet another setback.”
Alongside the Canadian Medical Association and the Conservative Party, other groups and individuals have also expressed concern about the capital gains tax changes, which are set to come into force in June.
Shopify’s president, Harley Finkelstein, said the tax change is the “complete opposite” of making Canada “the best place for entrepreneurs to build.”
He added: “Innovators and entrepreneurs will suffer and their success will be penalized -- this is not a wealth tax, it's a tax on innovation and risk taking.
“Our policy failures are America's gains. At a time when our country is facing critically low productivity and business investment our political leaders are failing our country's entrepreneurs.”
Former Liberal finance minister Bill Morneau, meanwhile, also fretted about the new tax arrangement, warning: “It's probably very troubling for many investors."
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