As a doctor, I believe in taxpayer-supported health care, education, childcare and other programs that support Canadians in their everyday lives. I chose to practise medicine because of my commitment to helping others. More specifically, I chose family medicine because of the impact I can have on my patients: welcoming a newborn into the world, supporting youth struggling with mental health, and overseeing the care of seniors in their golden years.
Public investments in health care are needed and welcomed. I applaud initiatives and investments to address Canada’s housing crisis, as we know well the health impacts of inadequate housing, alongside other social determinants of health.
New investments for health, housing and more come with the need to raise revenues or reduce spending. In its 2024 budget, the federal government proposes raising the inclusion rate for capital gains from 50 per cent to 67 per cent in June 2024. The increase would apply to capital gains above $250,000 for individuals, and all gains realized by professional corporations. This increase would apply to most physicians who run community-based clinics.
Increasing taxes for doctors may seem like a reasonable proposal to most Canadians. It’s a debate that is likely taking place around dinner tables and one that will make its way to the House of Commons during budget deliberations. So, let’s consider a few facts to help inform the conversation.
As a community-based physician operating a medical practice, I’m responsible for funding my office space, all medical supplies and equipment, electricity, office support staff, the technology required to collect and store health records and run an efficient clinic, sterilization equipment and more.
To manage our practices, I — like about 60 per cent of physicians in Canada — set up a professional corporation as a tax strategy to manage expenses and generate retirement savings. Physicians do not have access to employer or government-based pension plans, nor do we have employer- or government-provided benefits, parental leave, sick leave or paid vacation. We are also solely responsible for funding these benefits for the staff we employ. When there are cost increases to rent, insurance premiums, medical supplies or anything else, we cannot simply pass those costs onto our patients because our fees are set with the province or territory in which we practise. This infrastructure is critical to health-care delivery across Canada and is not easily replaced.
To keep our clinics modern and up-to-date, physicians frequently reinvest revenues into our practices to bolster patient care, upgrading medical equipment, expanding facilities or integrating new technologies. These investments directly enhance patient experiences and contribute to better health care outcomes.
With the proposed tax changes, the federal government says it intends to make the tax system fairer while making the wealthy pay more to support things like housing and health care for all Canadians. The unintended consequence of this proposal is that it puts significantly more strain on community-based physicians: family doctors, pediatricians and others, all of whom are desperately needed.
With the many impacts of the pandemic still present and a health care system that seems stretched sometimes beyond repair, physicians have been calling for investments to stabilize the system. When 6.5 million Canadians find themselves without a family physician, creating the right conditions to fend-off an exodus of doctors from medical practice is not only prudent, it’s necessary.
In a global competition for health-care professionals, doctors are in high demand. Creating competitive market conditions is critical if we’re serious about fixing access to primary care in this country. Some European governments are ahead of us on that front with tax incentives in place to keep doctors in practice for as long as possible, and to keep them in their country.
May 1 was National Physicians’ Day in Canada, a day meant to celebrate how doctors contribute to our individual and collective well-being. On that day, policymakers were in Ottawa debating the federal budget, and raising capital gains for professional corporations. Perhaps they should also take stock of the increasing burden being placed on the shoulders of those we seek to celebrate.
We are encouraged that the federal government is open to discussing the new tax measures to better understand the impact of the proposal. We know that in collaboration with provincial/territorial governments, the federal government is committed to shoring up our health system at a time when Canadians need it most. That commitment must extend to supporting physicians without whom the health system collapses.
The impact on the proposed capital gain increases on physicians is real, particularly for mid-to-late career physicians who may opt to reduce their workload or retire prematurely. It is also real for medical students, as we need to make family medicine, and community-based medical practice a preferred option.
These proposed changes should be concerning to all Canadians. I’m hopeful that the government will work proactively and collaboratively to address these concerns raised by the medical community. The last thing our strained health system needs is yet another reason for physicians to consider hanging up their stethoscopes.
Dr. Kathleen Ross is a family physician in Coquitlam and New Westminster, B.C. and is president of the Canadian Medical Association.
This commentary was first published by The Hill Times on May 6, 2024.