Thank you, Mr. Chairman.
The CMA and our 85,000 members are proud to empower and engage with our patients, and to provide the highest quality of health care for Canadians.
Like many other organizations representing small businesses in Canada, the CMA remains seriously concerned about the magnitude of the proposed amendments and the time frame for a detailed evaluation of the impact of the proposals. We believe that 75 days for consultation is not enough, given the scope of the proposed changes to a structure that has existed for 45 years.
I would like to address three major issues that set out the unexpected consequences of the tax proposal as presented.
First of all, what happened to promoting the health of the economy?
You heard from the Coalition for Small Business Tax Fairness that small and medium businesses are the economic drivers of Canada. This description also applies to doctors' offices because they generate significant economic activities, while providing essential medical care to the communities that make up our great country.
It is becoming imperative to maintain the conditions needed to support the continued success of doctors' offices when the growth of the economy and the delivery of essential services are taken into account.
Here are some facts about it. In 2016, for instance, the gross domestic product generated directly by doctors' offices in Canada reached $22.3 billion. Medical professionals paid $6.2 billion in salaries and employed 137,000 people. Doctors' offices have generated $643 million in tax revenue for government coffers.
The tax proposals under review require doctors whose practices are incorporated, like any entrepreneur, to adjust their business models. These adjustments will have unexpected consequences by bringing about a decrease in the economic footprint of doctors' offices and by potentially limiting services to Canadians.
Second, why is incorporation logical for so many doctors in Canada?
The majority of doctors, or 66%, for a total of 54,000 doctors, own and operate a private company that is the structure that supports the viability of their practice by providing access to working capital. Doctors rely on working capital to invest in their practice, which includes the purchase of equipment, modernization of examination rooms, implementation of electronic medical records, and many other clinical investments. Working capital is also essential when physicians seek to provide more services to meet the growing health care needs of the community.
The structure may also make funds available to compensate for maternity leaves, sick leaves, parental leaves and employee turnover, as well as to save for retirement.
As a legitimate business organization for doctors that has been endorsed and encouraged by successive governments, incorporation has well-established risks and benefits.
Lastly, why is it necessary to make the right decision at this point? That's the last and most important question.
Doctors' offices play an essential role by giving Canadians access to medical care across our vast country. Any change to the current tax system may have unexpected consequences by forcing owners of doctors' offices to decrease their activities and by stifling the expansion of the most needed medical services.
We have an opportunity to get this right, and Canadians want us to. The proposals announced in July have far-reaching implications and unintended consequences. As a result, we strongly urge the government to undertake a comprehensive review of the tax system, with fairness as the principle driver of change. A fair tax system accommodates taxpayers who assume different levels of risk, and is flexible enough to allow small business owners, including physicians who operate medical practices, to manage in various circumstances.
Finally, fairness also dictates that if self-funded safety net provisions are eliminated or significantly adjusted in the new tax regime, other vehicles must cover planned and unplanned events. In our submission to the government, the CMA will ask that the proposal be suspended to allow for a complete review of a tax system that engages all Canadians and considers the unique aspects of all sectors.
I would be happy to answer any questions you may have.
Thank you.