Cape Breton anesthesiologist Dr. Craig Stone is warning Ottawa's proposed tax changes for small businesses will make it even more difficult to recruit and retain doctors, and could even send Canadian physicians to the U.S.

Stone is president of the Cape Breton Medical Association, which met late last week to discuss the implications of the proposed changes.

"This is going to cause significant hardship," said Stone. "Suddenly we're going to have the rug pulled out from under our feet. This is going to be catastrophic."

He said some local doctors are already talking about leaving Canada altogether.

Proposed changes

The planned reforms, introduced by the Trudeau government this summer, include eliminating income "sprinkling," which allows incorporated small businesses to get taxed at a lower rate by shifting income to family members who don't necessarily work for them.

Another reform would reduce the ability of private corporations to make passive investments in stocks and real estate.

A third reform would eliminate the ability to convert a corporation's earnings into capital gains, which are taxed at a lower rate.

Recruitment gains in jeopardy

Stone says about 70 per cent of doctors in Nova Scotia are incorporated and would see their invoices drastically reduced.

He points out that doctors, like many small business owners, have no company pensions, no employment insurance benefits and no life insurance. He says doctors use passive investment to set aside money for retirement and other contingencies.

Hundreds attended a rally in Sydney Mines last spring to raise concerns about doctor shortages. (Nic Meloney/CBC)

Last spring, Cape Breton doctors held rallies to call attention to the number of doctors who were leaving the island. The physicians said their colleagues were fed up with a lack of services and a lack of local leadership within the health authority.

The province has since announced it has recruited 16 new doctors.

Stone says the new tax regime will reverse those efforts and will make it all the more difficult to convince doctors to stay in Cape Breton, or anywhere in the country.

Stone says he's shocked the Nova Scotia government has not spoken out about the potential impact of the changes on recruitment in the health-care sector.

Province responds

A spokesperson for the Department of Finance and Treasury Board told CBC News in an email that the department is assessing the potential impact of the proposed changes.

"We will provide any input to the federal government within the consultation period, as the department has done previously when the federal government has proposed changes."

Ottawa is accepting comments on the proposed changes until Oct. 2.