Trudeau faces doctors angry with small business tax changes at B.C. town hall

During a townhall in Kelowna on Wednesday, Prime Minister Justin Trudeau faced angry doctors worried that proposed changes to the small business tax system unfairly target physicians.

'The rules that benefit the wealthy need a little tweaking,' Trudeau said in Kelowna

Prime Minister Justin Trudeau responds to questions during a town hall at UBC Okanagan in Kelowna, B.C.. Trudeau defended proposed changes to the small business tax regime as a matter of fairness. (Darryl Dyck/Canadian Press)

Prime Minister Justin Trudeau faced angry doctors at a town hall in Kelowna, B.C., Wednesday evening who worry proposed changes to the small business tax regime unfairly target members of their profession.

Monica Penner, a physician in the city, said Trudeau was sending the wrong message to students studying to become doctors by cracking down on tax planning measures they could use later to keep more of their incomes.

While she conceded she met with her accountant Wednesday and learned nothing would change for her personally, she said it's wrong for the government to curtail passive investments, a tax planning measure physicians have come to rely on to shelter money earmarked for retirement.

"The tax system has, built into it, things that disproportionately advantage the wealthiest Canadians," Trudeau said in response. "We know that, we've seen the graphs that show middle class incomes have stagnated over the last 30 years while the wealthiest one per cent have benefited more and more."

Trudeau and other Liberal MPs are in Kelowna for meetings ahead of their return to parliament later this month. Many of the conversations at the retreat have been centred upon the government's proposals to tighten tax rules around small businesses, a move they say will level the playing field between wage earners and proprietors.

Some 40 Liberal MPs asked questions of Finance Minister Bill Morneau Wednesday during meetings, hoping to get clarity on measures that have proven deeply unpopular with small business owners across the country, Liberal sources told CBC News.

"We put forward proposals that we're getting a lot of feedback on, and quite frankly a lot of people are worried ... but let me be absolutely clear there is nothing in these proposals that are targeting small, middle class businesses," Trudeau said.

'Moving the goal posts'

Anita Sanan, also a doctor in the area, accused Trudeau of "moving the goal posts" on physicians after they've come to rely on certain measures to hold on to more of their incomes. 

"We were given these tax strategies, legally, in lieu of fee increases that have been stagnant in this country over the last ten years," she said.

I'm having to choose between having a family and actually practising as a physician- Anita Sanan, physician in Kelowna

The number of Canadian-controlled private corporations has increased some 50 per cent since the early 2000s, according to the finance department. The number of professionals who have incorporated themselves to help reduce their tax burden has tripled over the same period.

The explosive growth is due in part to changes made by the Ontario government during negotiations with the Ontario Medical Association in 2005. In exchange for changes to the fee schedule paid to physicians, the province allowed doctors to incorporate their practices as small businesses to pay fewer taxes. 

Parental leave an issue

Sanan also echoed the concerns shared by the Canadian Medical Association earlier this week, namely that some doctors do not have access to maternity leave and thus rely on "income sprinkling" to pay a spouse to stay home with children.

"No maternity leave, no pension, no retirement, I have none of those options," she said. "I'm having to choose between having a family and actually practising as a physician here in Canada."

The prime minister quickly shot back, reminding her that many provinces do in fact have parental benefits for doctors. She said that simply wasn't accurate.

In B.C., there is a family leave program administered by the B.C. Medical Association (BCMA) that is funded by dues paid by doctors.

In addition to pregnancy benefits for female physicians, the program provides parental benefits for male physicians and adoptive parents. Benefits are payable for up to 17 weeks, at the rate of 50 per cent of eligible income up to a maximum of $1000 per week, according to the BCMA.

"The issue is that that's not entirely fair that people who have access to higher income brackets get to opt out of certain portions of the Income Tax Act," Trudeau said. "The rules that benefit the wealthy need a little tweaking."

Trudeau answered 11 questions from an audience of more than 2,400 people who waited hours to see him at the event, hosted at the Kelowna campus of the University of British Columbia. Trudeau also fielded questions on support for farm migrants, innovation, trans rights and why he went back on his promise to implement electoral reform, among others.

On electoral reform, Trudeau said while he favoured a ranked-ballot system there was simply no consensus on an alternative to first-past-the-post and a system of proportional representation would be "bad for Canada," because it could lead to fringe parties in the House of Commons.

The caucus retreat ends Thursday.


John Paul Tasker

Senior writer

J.P. Tasker is a journalist in CBC's parliamentary bureau who reports for digital, radio and television. He is also a regular panellist on CBC News Network's Power & Politics. He covers the Conservative Party, Canada-U.S. relations, Crown-Indigenous affairs, climate change, health policy and the Senate. You can send story ideas and tips to J.P. at john.tasker@cbc.ca.


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