Braid: Feds can learn from UCP's very bad week — reverse tax hike and give doctors a hand

The federal capital gains tax hike is ruinous to provincial efforts to keep family doctors in Alberta. Trudeau should reverse a bad policy

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The UCP are nursing a pair of serious self-inflicted wounds after their worst week since the early days of Premier Danielle Smith’s regime.

It takes a rare set of screw-ups to be seen as oppressing poor people one day, and charged with suppressing local democracy the next.

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But in one matter — the damaging effect of the federal capital gains tax grab — the premier is absolutely right.

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Ottawa’s move will especially hurt family doctors, the very people all governments are trying to keep on the job.

“This latest tax increase legislation should be called the Go Practice Medicine in America Act,” the premier said in a statement.

“Instead of increasing taxes on doctors or anyone else, the feds should attempt to control their spending habits and stop scaring investment, jobs and economic growth out of the country.

“The Liberal-NDP coalition continues to amaze me with their creativity in scaring investment and skilled professionals away from Canada.”

The province has been working to retain doctors with targeted funding increases and plans to pay them based on a panel of patients, rather than through billing for individual services.

Up to $200 million is set aside over two years to stabilize family practices. Currently, $92 million is being spend on urgent cash payments.

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Just as doctors are feeling the benefits, the feds step in and take money away. And it comes from physicians’ personal cash saved for retirement.

Dr. Paul Parks, the president of the Alberta Medical Association, asked Smith to urge Ottawa to reconsider the tax increase.

The premier’s office says she will raise the issue — although she certainly has already, publicly.

The federal grab doesn’t raise the rate of capital gains tax. Rather, it increases the amount of capital gains subject to tax, from 50 to 67 per cent.

Family doctors have no pension plan with the government or the AMA. They build up retirement funds through their own investments held in their professional corporations. These corporations are not exempt from the tax change.

Like many individuals, doctors hope to draw retirement money out of their account after they retire, at a lower income tax rate. Now they’ll get less money from any capital gains in their accounts.

Dr. Paul Parks, president of the Alberta Medical Association
Dr. Paul Parks, president of the Alberta Medical Association, says the higher capital gains tax will hurt doctors in retirement. Darren Makowichuk/Postmedia

Parks says “a lot of these family physicians are barely keeping their offices open. And there is nothing, not a penny goes into their retirement except from their own efforts.”

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“They (Ottawa) are changing the rules so that if you had any savings in there, you’re gonna get taxed retroactively at a higher rate. And so it’s literally another straw that is just making it impossible for the profession.”

Parks worries that many people won’t care about any of this because they think all doctors are rich.

“But we’re not like multimillionaires, not making a couple of million a year. I think the public misconstrues that.”

The average Alberta doctor brings in about $220,000 in fees a year, but much of that goes to overhead, staff salaries and other expenses.

The UCP provided an example this week of how to fix very bad mistakes.

First, the government briefly said city funding for low-income transit passes would be ended, then quickly reversed this shockingly callous move, laying blame on lower government toilers.

Next came the startling Bill 20, which lays the heavy hand of government power on municipalities and elected local politicians.

We can do this, said the premier, because the Constitution says all rules for municipalities flow from the province.

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That’s true in principle, but it can be politically ruinous in practice. Everybody assumes the people they elect, at whatever level, have some freedom of expression and power of decision.

The munis rose up, claiming local democracy was being undermined in an effort to shut them up.

Very quickly, the UCP tried to calm these roiling waters, saying the bill will be amended and any measures will come only after full consultation.

This was bad government on full display — and then, thankfully, in full retreat.

The feds should learn a lesson from that. So far, there’s no sign they will.

Don Braid’s column appears regularly in the Herald.

X: @DonBraid

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