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ALBAS: Is 'tax fairness' truly fair?

Dan Albas a Member of Parliament.
Image Credit: SUBMITTED/Dan Albas
August 27, 2017 - 12:00 PM

 


OPINION


It is difficult to turn on the news these days without hearing yet another media story about the United States administration. Even the most trivial of presidential social media stories have become almost daily features during prime time news coverage of many Canadian news agencies. I mention this as all too often, important Canadian events are being overlooked or ignored at the expense of US political coverage.

Why is this a concern?

In Ottawa, at the moment, the Trudeau Liberal Government is pursuing a new direction they refer to as “tax fairness” for Canadians. The Liberals enjoy using buzzwords like “tax fairness”. This phrase is cover for the fact that they are really proposing to seriously increase the amount of tax certain groups of society will send to Ottawa. This is the Liberal plan to deal with their problem of massively increased deficit spending.

Why should you care?

One of the groups who will be most seriously adversely impacted by these proposed tax changes is Canadian Doctors.

First, let me pass on some background information.

Doctors often operate like a small business. They pay rent, hire and pay staff, obtain insurance, cover monthly utility expenses, purchase medical equipment and supplies along with paying a host of other expenses. As a result of operating much like a small business, Doctors, often incorporate as there are tax advantages to incorporation.

What are some of those tax advantages? For starters, business income is taxed at a lower rate than personal income. However, it should be pointed out that when a Doctor pays themselves a wage out of the net corporate after tax income, they are taxed again on that income at the same personal income tax rates as any other Canadian. Incorporation also provides other advantages in that family members can also be employed, not unlike any other small business. This can help increase overall household income at a lower potential personal income tax rate. On the surface, this is why the Liberal Government asks if it's fair to allow professionals such as Doctors to benefit from these taxation benefits. 

However, there is another side to this discussion that is overlooked.

Doctors are not eligible for many of the same benefits as many working Canadians.  There is no lucrative public sector pension plan for Doctors even though they work entirely within the public sector in most cases. Likewise employment insurance, maternity benefits, disability coverage and more, is not provided to Doctors. Coverage for these critically needed benefits must be provided and paid for by the Doctors themselves.  In many cases, this is why Doctors will leave residual funds within the corporate framework. This allows them to access some of these benefits, maternity leave being but one example. Keep in mind when a Doctor is away for any reason, they suffer a loss of income or have to cover the costs of replacement coverage, all while monthly operating expenses remain in place.

The bottom line is if these “tax fairness” changes are pushed through by the Trudeau Liberal Government, they will seriously impact Doctors along with many other professionals all across Canada. While the potential outcome of these impacts is unknown given the already short supply of family Doctors, it is highly unlikely these tax changes will help with much needed recruitment and retention. 

My question this week: Do you support the status quo of the current taxation policy with professionals such as Doctors or do you believe a tax increase would create more "tax fairness"?

I can be reached at Dan.Albas@parl.gc.ca or call toll free 1-800-665-8711.


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