Policies at cross purposes

King government’s taxation hurting health-care recruitment effort

Prince Edward Island is struggling to attract and retain doctors, nurses and other health-care professionals. While Prince Country Hospital has been a recent focal point, recruitment remains an issue Islandwide. Consequently, Islanders face some of the longest wait times in Canada for surgery and other medically-necessary procedures, and many cannot find a family doctor.

But while the Dennis King government often speaks of labour shortages in health care and other sectors, its tax policies — and the tax policies of the federal Trudeau government — are partly to blame.

According to a new study, Islanders pay some of the highest personal income taxes in North America.

For example, among all 61 provinces and U.S. states, P.E.I. has the highest combined (provincial and federal) tax rate at $75,000 in income (37.2 per cent) and the fourth-highest at $150,000 (44.37 per cent).

If nearly 50 per cent of your additional earnings are clawed back in personal income taxes, the incentive to work is greatly reduced.

RECRUITMENT EFFORTS

These high tax rates affect health-care recruiting efforts in at least two ways. First, when highly mobile professionals (i.e. doctors) consider where to live and work, they obviously consider how taxes will affect their incomes.

Second, high personal income tax rates reduce the incentive for workers to work more (i.e. overtime or extra shifts). If nearly 50 per cent of your additional earnings are clawed back in personal income taxes, the incentive to work is greatly reduced.

To be sure, workers — including health-care professionals — base their decisions on where to live and work on a wide range of factors that extends beyond tax considerations, but research is clear that taxes play a role.

Meanwhile, the King government is in the red, with no plan to balance the budget.

RESTRAINING SPENDING

The government’s unwillingness to restrain spending has produced budget deficits and more government debt, which increases the chances that the government will raise taxes in the future to pay for today’s debt accumulation, making the province even less attractive to health-care professionals.

Clearly, the King government’s fiscal and health-care recruitment policies are working at cross-purposes. With high tax rates today and an approach to spending that will likely drive tax rates higher in the future, the government is creating a large and growing impediment that will discourage badlyneeded health-care professionals from choosing P.E.I.

If the King the government wants to make the province more attractive to doctors and other professionals, it should restrain spending, reduce taxes and position the province as a destination for top talent of all kinds.

STU NEATBY • GUARDIAN FILE Federal Health Minister Mark Holland, left, and P.E.I. Health Minister Mark Mclane sign a bilateral agreement in December 2023. However, Fraser Institute analysts say the taxation policies of the two levels of government are hurting P.E.I.’S health-care recruiting efforts.