Academic journal article Health Law Journal

Children's Fitness and Activity Tax Credits: Why They Were Created and What They Are Intended to Do

Academic journal article Health Law Journal

Children's Fitness and Activity Tax Credits: Why They Were Created and What They Are Intended to Do

Article excerpt


It has become increasingly common to use tax measures to address health issues. (1) In Canada, the tax system has long recognized the costs of accessing health services through such measures as the Medical Expense Tax Credit and the Disability Tax Credit. More recently, the federal and provincial governments have introduced a number of activity and fitness tax credits in recognition of the cost to parents of keeping their children active and physically fit. The most familiar of these activity/fitness credits are the federal government's Children's Fitness Tax Credit (CFTC) and the Children's Art Tax Credit (CATC). These federal and provincial credits vary as to their purpose, form, complexity and level of accessibility to Canadians families. This variation between the credits and the political discussion around these credits provides an opportunity to consider policy issues surrounding these credits and more generally, in using tax measures to address health issues. These credits are also a uniquely Canadian story, as Canada was the first, and

thus far appears to be the only country, to introduce tax credits specifically to encourage physical activity in children. (2)

I will begin this paper by explaining what the different credits are and how they came into existence. It is fascinating and useful to see how quickly the idea of a children's activity credit spread from a small credit in Nova Scotia in 2005, which cost their government about $1 million a year, (3) to credits costing over $250 million a year in 2013. (4) Additionally, if certain federal promises are kept, the cost of the credits could balloon to over $750 million a year in 2016. (5) Next I will consider why the credits were created. Were they intended to: (1) recognize the cost of children's activities; (2) reward parents for making healthy choices for their children; (3) be an incentive to put children in activities; (4) fulfil the government's responsibility to provide healthy activities for children outside of the school system; or (5) make the ruling party politically popular? Governments' intended aims appear to vary widely from reducing obesity and increasing physical fitness to bringing about other positive outcomes. The remainder of the paper will consider which groups benefit from the credits and whether they are a good policy choice. I conclude that although the goals of the credits are commendable, there is not an adequate policy base to justify the considerable expenditure these credits entail.

These credits provide an opportunity to observe how small tax measures, including tax measures to promote health, can increase rapidly even when there is a lack of evidence regarding whether they will be effective. The literature on the credits has thus far focused specifically on the CFTC, evaluating its effectiveness as an incentive and equity concerns related to this credit. (6) This paper is intended to add to the literature by providing a broader consideration of the credits. It will do this by explaining not only what the credits are, what they are intended to do and whether they are fulfilling their intended goal, but also by exploring how and why they came to be.

The Credits

This section will explore chronologically how these credits began and expanded into new credits and into covering new areas. The first two credits introduced focused solely on physical activity in children. As more credits were introduced this focus expanded to covering children's activities more generally, to providing refundable credits (7) and providing a greater rate of return on the money spent by parents. The first credit provided was for a maximum $ 15 return, and the CFTC, the next credit introduced, a maximum $75 return. The highest rate of return currently is in Saskatchewan where the maximum return from the CFTC, CATC and the Saskatchewan credit is $300. Also of importance are differences in the amounts and types of expenditures that qualify parents to receive these returns. …

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