The Canadian Medical Association is warning the federal government that raising the capital gains tax will jeopardize physician recruitment and retention in Canada.
The association supports the healthcare investments announced in the federal budget but says that the proposed changes to the capital gains inclusion rates will negatively affect physicians, most of whom operate their practice as small businesses.
“These changes could jeopardize ongoing efforts across Canada to recruit and retain a high-quality health workforce,” said Dr. Kathleen Ross, president of the Canadian Medical Association.
True North previously reported that the budget raises the inclusion rate for capital gains tax from 50% to 66% for individuals on amounts exceeding $250,000. The amendments to the Income Tax Act come into effect on June 25, 2024.
The Liberals estimate an extra $19.4 billion over the next five years from raising the capital gains tax.
Ross said that many physicians have incorporated their practices. They have relied on their professional corporations to save for retirement in lieu of employer retirement or pension plans.
An X user explained that doctors aren’t the only professionals who use their corporation as a retirement plan.
“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,” said Ross.
True North previously reported that Canada already ranks last among wealthy nations for access to primary health care. The country stood around the middle of the pack for access to a primary care provider in 2016, but an outflow of physicians would lead to Canada further cementing its position at the bottom of the list.
“The risk of already over-stretched physicians leaving the profession or reducing their hours in response to heightened taxation is real,” added Ross.
The doctors join over 1000 Canadian CEOs and tech leaders who signed an open letter to Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, urging them to reconsider the proposed increases to capital gains taxes, warning of entrepreneurs from across the country moving south of the border to earn a more competitive and less taxed income, as previously reported by True North.
“You cannot tax your way to prosperity. But in the 2024 federal budget, we see a government trying to hike taxes on investment. Anybody with experience in entrepreneurship and investment can see how this will stifle growth,” read the tech leaders’ letter.
Justin Trudeau responded to the press release issued by the Canadian Medical Association when speaking at an unrelated news conference on Tuesday.
“We just don’t think it’s right that a student or an electrician or a teacher be paying taxes on 100% of their income, while others have the opportunities to use accountants and pay taxes on only 50% of that income. This is about fairness,” said Trudeau.
Federal director of the Canadian Taxpayers Federation, Franco Terrazzano, said that more and more Canadians are speaking out against Trudeau’s tax hikes and that Trudeau should listen to Canadians and cut taxes. He said that all the Liberal government “knows how to do is hike taxes, make life more expensive, and waste money.”
“This is not about fairness. If this was really about fairness, Trudeau would be cutting taxes. But the only way taxes seem to go under this government in Ottawa is up. If this was about fairness, Trudeau would be cutting taxes for all Canadians. But instead, he’s hiking taxes. This is about squeezing every penny that he can from Canadian taxpayers,” said Terrazzano.
The vast majority of doctors already reside in the highest tax bracket. However, most physicians operating as small businesses will take significantly higher tax hits when they sell the land or buildings with which their practices operate, should those assets have increased in value by $250,000 or more.
“So yes, we are asking the most successful in this country to do a little bit more to make sure that everyone can see themselves in the success of this country,” he added Trudeau.
The Canadian Medical Association urged the Liberals to reconsider the tax adjustments that have been proposed and take steps to address concerns raised by the medical community.
“Our health system and the people who work tirelessly to prop it up cannot withstand yet another setback,” concluded Ross.