The Prime Minister of Canada Justin Trudeau has turned down a call for a revaluation of the capital gains tax rate from some doctors after his government had already announced about increase in the tax rate.
The doctors caution that the tax issue may prevent the recruitment and retention of doctors in Canada and endanger the stability of the healthcare system.
Canada, at present, has quite severe problems with an insufficient number of doctors. The lack of primary care is estimated to affect 6.47 million of Canada’s citizens due to widespread retirement among family physicians and medical faculties facing a shortage of medical residents to replace the retiring doctors.
“It simply calls on people who are the very wealthiest to contribute a little bit more, “trusted Aki (he or she) said at the heritage park of Wanuskewin (referring to Saskatoon, Saskatchewan) yesterday.
“The point is that whether a college student, an electrician or a teacher are all paying taxes on 100 per cent of their income while getting accountants’ tax advice and paying taxes on only 50 per cent – and they are not in the same boat,” he said.
Capital gain is the amount the cost of an asset whose price in a resale is larger than its original purchase price.
Now essentially only 50 percent of capital gains are taxed and the budget proposal is to raise the “inclusion rate” from the current 50 percent level to two-thirds for individuals with capital gains above $250,000.
The plan suggests the introduction of a 2/3rds withholding tax on all capital gains made by corporations and trusts.
Kanad Medical Association1 president Kathleen Ross said Tuesday the doctors will take the blow because they use their medical practices and investment funds within their corporations for their retirement.
Trudeau addressed the criticism saying the tax was there to make things equal.
“This is what I’m referring to when I say that in a failing economy, all of us are at risk; young and old alike, we must strive for a generation in which young people must excel because if we fail at this then they won’t be able to purchase properties in the next decades and neither will they have a swoonful future.”
And the answer is: – Yes, we’re keen on asking those who have attained the greatest success in the country a little more so that everyone can have a similar expression of glory.
Ross maintained that the new rules would increase the pressure on GPs and others whose savings are often restricted to no pensions.
Strategies for Recruitment and Retention
“This subsidy is also shown by the government as tax fairness across all generations, but in all honesty, some of the members in the society will be affected more than others,” Ross said according to the Canadian Press.
Ross underscored that medical doctors currently act as small businesses, using the corporate model to effect whatever services they want their patients to have.
In an open letter published on the CMA’s2 website, Ross said that the move “will just be one more obstacle to effective recruitment and retention of doctors who are already dealing with pressures that healthcare system is getting increasingly stressed.”
The sentence says that taxation harms doctors’ well-being and “threatens the stability of a struggling healthcare system” while many doctors are already retiring or reducing their working hours.
Dr Ross’s worries were mirrored by the nonprofit organization – Manitoba Doctors.
“The chance of attracting and holding the doctors might be made difficult by that kind of a change in the federal budget and that is a great point to be considered because we exhibit the highest shortage of doctors in Manitoba ever right this moment,” an organization executive said by e-mail.
Morneau Labels it Investment Disincentive
Former Liberal finance minister Bill Morneau also raised this issue last week by saying “Yes, it is negative to our long-term goal which is growth in the economy, productive growth and investment.”
“This was undoubtedly the reason why we opposed it whenever we found it happening — we were worried about the future of our country,” the minister explained in an interview with KPMG, the largest accounting firm in the country.
“Any pausing measure, creating disincentives, will not only harm us from the viewpoint of domestic investors but also be seen as such from the outside–foreign investors.”
Jessica Brandon-Jepp, the senior director, of fiscal and financial services policy, at the Canadian Chamber of Commerce, pointed out capital gains increase may have a negative influence on development.
Canada must oppose any measure that will inevitably increase the business running costs or the consumers as well when both are still suffering from a financial strain.
In a statement, a spokesperson for Finance Minister Chrystia Freeland said that due to the changes in the capital gains inclusion rate, there will be a situation where a nurse will pay a higher marginal tax rate than a multi-millionaire.
On top of the $200 billion investment in health care, the enhanced forgiveness of student loans has been implemented for doctors and nurses who want to serve in rural and remote locations, said Katherine Cuplinskas.
- Rhodes, Emily, et al. “Primary care physician use and frequency of visits among physicians in Ontario, Canada.” JAMA Network Open 5.8 (2022): e2227662-e2227662. ↩︎
- Smart, Katharine. “Critical family physician shortage must be addressed: CMA.” Canadian Medical Association (2022). ↩︎
Last Updated on by Sanjana
