On Monday, the Senate’s national finance committee was in St. John’s holding public sessions as part of its investigation into planned federal tax changes.
Senator Elizabeth Marshall told The Telegram she is committed to seeing any concerns from this province factored into the review.
Marshall — joined on the committee by another senator from Newfoundland and Labrador, David Wells — said she is particularly interested in how doctors in the province might be affected by what has been proposed.
The suggested changes focus on three areas: income sprinkling, whereby a business owner uses a private corporation to spread income among family members to create tax savings; converting income into capital gains, allowing the business owner to benefit from a lower tax rate; and holding passive investments inside a private corporation, which is essentially using the company instead of a saving account, also granting a lower tax rate.
“Anybody that has a small business, it’s going to impact them. It will impact their families and it could impact their employees, and it could even impact their company — you know, will they survive these tax changes? Because it’s not just the tax changes. One of the things that we’re hearing is that businesses are really concerned about the uncertainty out there,” Marshall said.
She said she wonders about a few professions potentially being affected more directly than others, and whether or not doctors here might move out of the province, or even out of the country, if the tax changes happen.
“When we were in Saskatchewan and Manitoba, what they were telling us is about 50 per cent of their physicians are foreign trained, which means they’re mobile,” she said, adding that people in Newfoundland and Labrador should watch for that risk.
In September, The Telegram reported on a Newfoundland and Labrador Medical Association (NLMA) submission to Finance Minister Bill Morneau, noting a survey of NLMA members found 83 per cent would consider reducing work hours in order to avoid higher taxes, while 62 per cent said they would consider leaving the province for work elsewhere.
In early November, the Canadian Press reported Manitoba Finance Minister Cameron Friesen told the Senate committee that the federal government should abandon its changes and simply undertake a full review of the federal tax system.
This review was also suggested by people addressing Marshall and the rest of the Senate committee during the sessions in St. John’s. There were presentations from Bill Stirling of the Newfoundland and Labrador Association of Realtors, Dorothy Keating of the St. John’s Board of Trade and Memorial University of Newfoundland economists Wade Locke and Doug May.
The committee was also scheduled to hear from Larry Short of HollisWealth, Des Whelan of the Canadian Home Builders’ Association, Jim Case of LAT49 Architecture, Jason Sullivan of Stone Island Enterprises, Kerry Murray of the Newfoundland and Labrador Federation of Labour, Michael Power of Power and Associates, Laurie Skinner of KMK Capital and Dr. Paul Johnston.
The finance minister was in Newfoundland and Labrador in late September to speak about the planned changes, which are expected to be introduced in Budget 2018.