The proposed tax changes by the federal government have made some of New Brunswick’s medical students and residents question their plans for working in the region when they graduate and finish their residencies.
One of them is Colin Rouse, a family medicine resident at the Saint John Regional Hospital. Since graduating from high school in 2007, he’s been in post-secondary institutions on the path to becoming a family physician in New Brunswick. After another year in residency, he will be able to open his own practice.
“My plan definitely all along was to practice here in Saint John hopefully, or at least close by in New Brunswick,” says Rouse. “That’s why I did most of my training here. I chose not to go away and do training elsewhere because I wanted to get familiar with the community that I eventually hope to be practicing in.”
Since becoming any kind of doctor comes with more than 10-plus years of schooling and a huge amount of debt, Rouse created a career and financial plan with an advisor that centred around opening his own practice in New Brunswick. The expenses of doing this includes hiring at least two staff and paying for his office space or building. Like most people who are self-employed or entrepreneurs, he wouldn’t have a retirement package or corporate pension. To compensate for this, he planned to finance these through a corporate investment portfolio.
The problem: This is something the proposed federal tax changes consider a “loop-hole” and plans to tax at a higher rate.
A second tax provision the government plans to limit is “income sprinkling,” which enables small−business owners to use their corporations as a way to shift some their income to family members who face lower personal tax rates, even if those relatives are not active in the business.
The third proposed reform is to limit the ability to convert a corporation’s regular income into capital gains that are typically taxed at a lower rate.
The federal Liberal government has maintained that the changes would create more fairness in the system. But those in opposition have described the measures as a “cash grab” and detrimental to small businesses of all kinds, since self-employed people and entrepreneurs don’t have benefits and corporate pension plans. They also argue the current tax measures allow business owners to save money for when their businesses have a bad month or slow season, so they can still meet requirements like payrolls and keep the lights on.
But for Rouse, the proposed changes have made a solid plan for a young doctor to start his practice in his hometown seem questionable.
“I thought under the current system I could have a job that I really enjoyed, that I could contribute to the community and be compensated fairly for that because we do take on such a high debt burden,” says Rouse. “It was quite a shock to learn how big of an impact it’s going to have on my ability to retire and save for retirement, so that was my biggest concern with the change.”
Though he still hopes to open a practice in New Brunswick, he says the proposed changes have left him and his fellow medical students feeling less certain about where they choose to work.
“Speaking with colleagues at the hospital that are training, there’s a lot more talk of what people are going to be doing going forward,” says Rouse.
“Before this, I never would have looked for a job overseas or south of the border, but I think it’s something I’m considering. It’s not something I want to do and I’m hoping it’s not something that I’ll have to do, but at the same time, I also hope to have a job that is going to allow me to pay back my debt and save for retirement.”
“I’m hoping that possibility is going to be here, but I will be broadening my search for a job once I’m finished.”
Tax changes could limit access to family doctors
According to the New Brunswick Medical Society, more than 50,000 New Brunswickers are without a family doctor. There’s also the issue that family doctors in the province have some of the biggest patient loads in the country. According to the Medical Society, half of New Brunswick’s family doctors have patient loads greater than 1,800, compared to the Canadian median of 1,400. This makes it hard for many people to see their doctor in a timely fashion. Rouse says if proposed federal tax changes go through, the situation could potentially worsen.
“It definitely has the potential to have a huge impact on the health care system and that’s another huge concern for me because my plan is to work here,” says Rouse.
“I think with these changes you may see some of those older family doctors that are close to retirement considering just retiring because they’re not going to be compensated as much as they have planned … and certainly that’s going to put significant pressure on these new graduates that are coming out, especially if more grads are considering going south of the border or overseas to practice. We can see wait lists get longer for people waiting to see a family doctor and in turn waiting longer to be referred to a specialist if they do need those specialist services.”
The proposed tax cuts have gotten many doctors, lawyers and small business owners contacting their backbench members of parliament to express their concerns. Rouse has written his MP, Saint John’s Wayne Long, expressing his concerns and he shared his letter publicly on Facebook. He says he met with Long last week.
“It was good to have a chance to sit down with [him] and go over what these changes are and what kind of impact they’re going to have on small business owners, not just doctors,” he says. “He said he has met with few other doctors and business owners who have had concerns. He said he would take these concerns to the caucus meeting they’re having out in Kelowna [British Columbia] and I’m sure lots of other backbench MPs out there are talking about these issues as well.”
Though it was nice to express his concerns to Long face-to-face, Rouse says it comes down to whether or not MPs will act on their constituents’ concerns. He says the 75-day consultation is too short to fully grasp the implications these changes could have.
“I guess it will come down to if our MPs are going to pass this motion or are they going to take more time to review what the implications are going to be. I think a 75-day consultation seems to be a bit rushed to fundamentally change how small businesses are taxed,” he says.
“It seems like it’s a big rush for me and I’m not sure why the government is not going to take its time on this and really see what kind of implication it’s going to have on things like the health care system. I haven’t seen a whole lot of information from the government on what they’re expecting to happen once the taxes go through.”
This is part of a series of stories Huddle is doing on how the proposed tax changes could affect business owners: