The Children's Fitness Tax Credit - Less than meets the eyeMonday, July 26 2010
The Children’s Fitness Tax Credit was announced by the government in the 2006 federal budget to much hoopla. It promises a $500 tax credit applicable to the costs of children’s fitness programs, and conjures up a quintessential Canadian image of parents, holding a Tim Horton’s coffee, ferrying their children to early morning hockey practice. Its laudable policy objective is to increase children’s physical activity levels.
On the face of it, it seems hard to quibble with such a wholesome policy. However, if you look more closely at this image, it raises some unsettling questions about the tax credit. Who does it include and who does it leave out? And, will it work?
The government’s stated objective for the tax credit is to promote physical fitness among children. The Expert Panel appointed to advise the Minister on the design of the credit indicated that an objective of the tax credit is also to reduce childhood obesity. While these are important policy objectives, it is unlikely that this particular tax credit will adequately meet them, and may unfairly advantage some Canadian families and leave others behind.
The image of early morning hockey is worthy of closer examination. Is the child going to hockey practice a girl or a boy? What neighbourhood does she or he live in? What is that child’s parents’ income? Which activities that help reduce obesity aren’t eligible for the tax credit?
The design of the tax credit does not take into account differences in participation in physical activity by gender. According to a study conducted by the Canadian Fitness and Lifestyle Institute (2006), while 24% of boys spent five or more hours per week being physically active during their free time at school, only 13% of girls had equivalent rates of school free time physical activity (www.cflri.ca/eng/statistics/surveys/2006HBSC.php).
According to the same study, outside of school hours, 40% of boys compared to 28% of girls spent seven hours per week in moderate physical activity.
The fitness tax credit does not address these important gender differences, and as a result, a seemingly gender neutral program such as the fitness tax credit will actually disproportionately support boys’ physical activities.
Hockey is not the only answer to reduce obesity
Nursing research suggests a broader range of activities than those eligible for the tax credit are best suited to reducing childhood obesity.
The RNAO’s evidence-based best practice guideline for the Primary Prevention of Childhood Obesity recommends physical activities that are tailored to the strengths and needs of the child and are: developmentally appropriate; culturally and linguistically relevant; gender-specific; and affordable and accessible (www.rnao.org/Storage/12/620_BPG_childhood_obesity.pdf).
The RNAO guidelines also recommend that less active children participate in leisure activities of low intensity that are gradually increased to recommended levels. It suggests that the increase in physical activity should include a combination of moderate activity (such as brisk walking, skating and bike riding) with vigorous activity (such as running and playing soccer).
The fitness tax credit does not take this research into account. Nor does the tax credit encourage informal physical activity important in many youth cultures, such as basketball ‘pick up’ games and skateboarding. These activities are central to the lives of many children and increase physical activity and reduce obesity.
Children living in or near poverty do not benefit from the tax credit
Research based on the 1994 National Longitudinal Survey of Children and Youth indicates that the strongest predictor of children’s participation rates in supervised sports activities is income levels. It shows that over 60% of children from very poor homes almost never participate in these activities as compared to 27% of those in well off homes (www.hrdc.gc.ca/en/cs/sp/sdc/pkrf/publications/bulletins/1999-000002/page06.shtml).
More recent research indicates that prevalence of overweight and obesity is dependant both on income levels and neighbourhood socio-economic status. Overweight and obesity increase from 24% and 7% respectively in high socio-economic status neighbourhoods to 35% and 16% in low socio-economic status neighbourhoods. Participation rates for organized sports activities follow a similar pattern (CJPH, 96(6), 415-420). In other words, income levels and socio-economic status are important predictors of participation in organized physical activity.
The requirement for eligible activities to be supervised, the limited financial support provided by the Children’s Fitness Tax Credit, and the need for sufficient taxable income for it to be of any value suggests that the tax credit will have little benefit for low-income families and, therefore, little impact on the physical activities of children in low-income families. Yet, it is precisely these families that need it the most, since their children have a higher incidence of being overweight and obese.
Tax credit of little value to anyone
Is the tax credit large enough to change behaviour, and to encourage more parents to enrol their children in physical fitness activities? The average annual cost of a minor hockey program is estimated at up to $1000 a year. The fitness tax credit would provide a maximum benefit of $77.50 or 8% of the cost of the activity.
Other activities have more modest costs. For example, soccer is a more affordable activity. At an average cost of $125, the tax credit would provide a maximum benefit of $19.38. It seems that this size of a subsidy would have a limited impact on the affordability of these activities.
Research suggests a complex relationship between activity levels, income levels and class that encompasses social and physical environments, safety, access and the civic nature of communities. The Children’s Fitness Tax Credit is a very blunt instrument to address these complex issues. The multifaceted and inter-related factors of increasing access, safety, and overcoming gender barriers are better suited to direct spending programs.
Sheila Block is the Director of Health and Nursing Policy at the Registered Nurses’ Association and a Research Associate with the Canadian Centre for Policy Alternatives.
How the Children’s Fitness Tax Credit Works
What is the tax credit?
The government has announced a non-refundable tax credit of up to $500 paid by parents to register a child under 16 years of age in an eligible program of physical activity.
But does that mean a parent’s taxes would be reduced by $500 if their child participates in a physical activity?
The simple answer is no. The maximum value of the non-refundable tax credit is equal to $500 multiplied by 15.5 % (the lowest tax rate in 2007). The maximum value is $77.50 per child, for eligible activities costing $500 or more.
Who will benefit from this program?
It has no value for parents whose income is not taxable, such as social assistance recipients. For those parents whose taxable income is low enough that other expenses, such as child care, reduce their taxable income to zero, this program will also have no value.
What kinds of activities are eligible?
For an activity to be eligible it must be a program that is ongoing, supervised and suitable for children, and in which there is a significant amount of physical activity that, according to the program guidelines, “contributes to cardio-respiratory endurance, plus one or more of the following: muscular strength, muscular endurance, flexibility and balance.”
For more information, visit: www.cra-arc.gc.ca/whatsnew/fitness-e.html or contact your local Canada Revenue Agency office.