Social Policy in Ontario

Nurses announce support of proposed tax changes that have doctors fuming

Posted on September 8, 2017 in Equality Policy Context

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NationalPost.com – News/Politics
September 6, 2017.   Brian Platt

In a blow to the political efforts of doctors to halt proposed tax changes that will hit their income, the Canadian Nurses Association has come out in favour of the government’s plan.

A statement posted Tuesday evening by the CNA, which represents about 139,000 registered nurses, said it supports the government’s “aim to achieve federal tax policy that treats all sources of income similarly and equitably, based on the principles of social justice.”

The CNA is also encouraging its members to write to their local MP about the changes, mirroring a campaign by doctors to do the same in opposition to the proposal.

“CNA supports the proposed changes to the federal tax code which reasonably strengthen the rules on increasingly-popular but potentially unfair tax advantages for incorporated high income earners,” the statement says.

Unlike doctors, most registered nurses are salaried and unlikely to get much in the way of tax benefits from incorporating (though some nurses are self-employed). Doctors, by contrast, are considered independent contractors and get their income through fees regulated by provincial governments.

Barb Shellian, CNA’s president, said in an interview that registered nurses aren’t trying to provoke a confrontation with doctors, but have studied the government’s proposal and broadly support its aims.

“We don’t see this as a foundational change for a large number of people in the healthcare system,” she said.

“Nurses have told us that they believe people should pay their fair share, and the principle of paying people well for what they do is always the foundation. If you have advanced education, you’re in a job where you need a lot of skills and knowledge, you should be paid well for that. But you should also be taxed fairly for that, because income is income.”

Finance Minister Bill Morneau has proposed sweeping reforms to the way private corporations are taxed, with the stated goal of reducing tax avoidance by the wealthy. A wide range of small business groups and professional associations who are worried about the effect of the proposal have joined efforts to oppose the government.

Speaking before a Liberal caucus retreat in Kelowna, B.C., Prime Minister Justin Trudeau emphasized the government has no plans on backing down.

“I want to be clear: People who make $50,000 a year should not pay higher taxes than people who make $250,000,” he said. “We’re always open to better ways to fix that problem, but we are going to fix that problem.”

Around two-thirds of Canadian doctors are incorporated, often at the encouragement of provincial governments as a concession on fee negotiations.

There are extensive guides for doctors on how they can save tens of thousands of dollars through incorporating. As one example, doctors can name family members as shareholders and then split their income through the corporation to drop the doctor’s income into a lower tax bracket.

The proposed changes, announced on July 18 for a 75-day consultation period, would include requiring all family members named as shareholders to pass a “reasonableness test” to ensure they are legitimately earning the dividends, rather than simply getting them for tax reasons. It would also eliminate the income tax advantage of holding a passive investment portfolio inside a corporation to get a lower tax rate, and then withdrawing it later.

As doctors have pushed back against the proposed changes, they have argued it will negatively impact the health system.

“The federally proposed changes will affect how we’ve been investing in our medical corporations and — ultimately — could set the stage for a national crisis in primary care,” wrote Shawn Whatley, the Ontario Medical Association president, in an Aug. 2 newspaper column

. “Cuts to doctors mean cuts to patient care. It may take months, or even years, but patients will feel the cuts inevitably, and I’m certain they’ll be painful.”

The CNA’s statement rebuts that position, arguing the changes are good in the long-term for the medical system.

“Should the proposed changes pass, provincial and territorial governments should see an increase in revenues which can be invested in strengthening our publicly-funded health services, which in themselves employ thousands of salaried, highly-skilled professionals who pay their fair share of personal income taxes.”

The consultation period on the government’s proposal runs until Oct. 2.

http://nationalpost.com/news/politics/nurses-announce-support-of-proposed-tax-changes-that-have-doctors-fuming

Tags: budget, economy, Health, ideology, standard of living, tax

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