Thank you.
I've been up since three o'clock. I took the flight out of Cape Breton this morning, one which Ms. Raitt might have taken in the past, so it's been a long morning so far.
I could just say ditto to what Denise said, but I will read what I have here.
I am a family physician from Cape Breton, Nova Scotia. I am the daughter of a small business owner. I am here to speak to the content of a letter that was signed by close to 500 physicians and medical students across the country. The letter's signatories and I are in favour of the proposed federal tax changes for Canadian-controlled private corporations, or CCPCs. The reason we are in favour is that we support greater equity amongst Canadians.
Let me say first that this is not unequivocal support. It is regretful that the federal government has not closed the tax loophole of being able to be paid the stock options used by CEOs and other high-income Canadians. Given that Canada's top CEOs earn 193 times what the average worker earns, it is imperative that the government keep its election promise. As well, various other policies that can be implemented, as was mentioned particularly in the last session, should also be considered.
Cape Breton is a beautiful island with rolling hills and exquisite ocean views. That's the image you tend to see in tourist brochures. In contrast to those scenes, one third of our children on the island under age six live in poverty. There is a first nation just down the road from me, and they cannot drink, cook with, or bathe in their water. A patient I had in clinic yesterday holds three minimum wage jobs, barely sleeps, and is struggling to take care of her daughter as a single parent.
In contrast, the vast majority of physicians remain amongst the top 1% to 5% income earners in Canada. We as doctors recognize that adequate tax revenues are needed to fund such social programs as affordable housing, social assistance, legal aid, hopefully one day national pharmacare, and the health care system itself. These programs directly impact the health of our patients. We believe it is important for us to contribute to their sustainability through an adequate tax base. We do ask that any tax revenue that is gained through these tax changes go to funding policies and programs needed to ensure the health of our patients.
Now, physicians are in a unique situation of being publicly funded but mostly self-employed, often running practices with varying amounts of overhead. Many physicians do have legitimate concerns about their work situations, including a lack of extended health benefits, parental leave, or pensions. We have long training periods, incur significant student debt, enter the workforce late, and have high rates of burnout. However, we feel that these issues are best addressed at their root, with the best of all available policy solutions, and not in inherently unstable ways such as through our tax system, which is constantly evolving.
It is important to note, however, that the methods that have been primarily used by some doctors—lower tax rates on passive investment income through a corporation and income sprinkling—are legal, and were in fact encouraged by several provinces in lieu of fee increases as part of negotiations, despite federal jurisdiction over relevant tax policy. We know that these benefits are advantageous, as was pointed out earlier, primarily for certain incorporated doctors with specific family situations and those who earn enough to supersede traditional saving vehicles available to all Canadians. This seems unfair to single parent physicians, of whom I am one, and those with young children or those who are unincorporated. It also seems unfair that these benefits are not available to Canadians with similar incomes who cannot incorporate. It is also worth remembering that only 60% of physicians are incorporated, and this option has only been available in some places in the past decade or so.
That said, the changes we are supporting cannot be made without a transition plan, nor in isolation, but rather as part of a comprehensive review of tax policy with a view to equity. As such, we call on the federal government to do four things.
One, implement proposed reforms to CCPCs as a first step in a comprehensive reassessment of tax policy in Canada, especially mechanisms that disproportionately benefit large corporations and the wealthiest Canadians.
Two, outline a clear transition plan for savings held in medical professional corporations. Physicians who have used these methods under existing agreements to prepare for retirement should not be unfairly penalized.
Three, work with the provinces and territories to review options for access to extended health benefits, parental leave, and pension plans for all Canadians, as well as payment reform options that would be available to all physicians and address these important aspects.
Four, work with provinces and territories to tackle the issue of increasing medical student debt, namely, by lowering tuition for incoming students and implementing forgiveness programs for existing debt.
I realize that the federal tax changes go far beyond the concerns of physicians, but this is the world that I know, so it's the one I'm speaking to. What I feel and what many physicians across the country feel is that an equitable tax system is a goal that we can support and can pay into.
Thank you.