January 31, 2014

 

Hon. Doug Currie

Minister of Health and Wellness

105 Rochford Street

Charlottetown, PE

C1A 7N8

 

Dear Minister Currie,

 

Our organization was very pleased to see that you were looking for public consultation on your “Towards a Culture of Wellness” discussion paper.

 

The Canadian Taxpayers Federation (CTF) is the largest taxpayer advocacy group in Canada with over 84,000 supporters nation wide. The principles that we promote are less waste, lower taxes and accountable government.

 

We obviously share in supporting your overall goal of building an achievable and measurable plan to make Islanders more fit, active and healthy. Given the cost of health care, ensuring that people are healthier will help reduce the strain on government finances.

 

However, while we do support the overall objectives of your discussion paper, we have concerns about two of your proposals on how to solve some of the health problems Canadians face.

 

1. “Health Tax” on drinks

 

In January 2013, Lamont Sweet, PEI’s Deputy Chief Medical Officer, told the CBC “comments from the public include a suggestion that PEI charge a small health tax on these drinks (soda) to control consumption.”

 

Proponents of these types of taxes say that by raising the price of an unhealthy product you make people more likely to choose healthier options.

 

But in order for the tax to work you have to assume a number of things.

 

First, there must be a clear provable link between the item that you have decided to tax and that product’s ability to make a person unhealthy.

 

Second, you assume that consumers are sensitive to price changes in products and they’ll make different purchasing decisions based on very small price increases.

 

These reasons in support of the tax are based on myths about what a tax would actually do.

 

Myth #1 Soda is the cause of growing obesity statistics

 

The reality is over the past 15 years overall soda consumption in Canada is on the decline. Yet, at the same time obesity rates continue to increase. If soda consumption has so much to do with the growing waist lines of adults and children alike, why does there seem to be an inverse relationship between them?[1]

 

While, there have been many public studies showing a connection between soda and childhood obesity there have been almost just as many that are unable to find a link.

 

Research from Project EAT (Eating Among Teens) at the School of Public Health in the University of Minnesota and published in the American Journal of Clinical Nutrition in 2009 also set out to examine the role of soda and other beverages in adolescent obesity.[2] It is interesting to note the goal of the study as stated by the researchers: "We hypothesized that sugar-sweetened beverages would be positively associated with weight gain." The final results conclusively rejected their original hypothesis. The study found "no association between sugar-sweetened beverage consumption, juice consumption, and adolescent weight gain over a five-year period."

 

Another study encompassing over 137,000 children from 34 countries, including Canada, and funded in part by Health Canada and the Canadian Population Health Initiative and published by the International Association for the Study of Obesity looked at the relationship between healthy foods such as fruits and vegetables, unhealthy beverages such as soft drinks and overall weight gain.[3] Again the expected link between soda and obesity was nowhere to be found.

 

"There were no consistent patterns and few significant findings for the relationships between fruit, vegetable and soft drink intake with overweight," reports the study. What researchers did find was a significant relationship between physical activity, television viewing and BMI scores. "With greater television-viewing there was a greater odds of overweight." These findings suggest obesity-focused public policy efforts are misplaced when focused on diet. 

 

A large study of Canadian children published in 2012 found "no consistent relationship between sweetened beverage patterns of intake and overweight and obesity" among four of five demographic categories examined (both sexes aged two-to-five, boys six-to-11, girls six-to-11, boys 12-to-18 and girls 12-to-18).[4] Only boys aged six-to-11 who consumed large amounts of soft drinks showed an elevated risk of overweight and obesity.

 

Yet another Canadian study of Grade 5 students in Nova Scotia compared the availability of soft drinks in school cafeterias and found no difference in the risk of weight gain between children who could drink soda at school and those who do not.[5] However, "the association between obesity levels and frequency of physical education classes was striking," the report found. Children in families that ate dinners together were also less likely to be overweight.

 

Given that soda consumption is on the decline, and yet we are still getting more overweight, why is it that some advocates support this new tax? What problem would a new tax solve?

 

Myth #2 Putting a small tax increase on unhealthy products would result in people purchasing healthy options

 

If the objective of a soda tax is to cause people to drink less of the beverage and lose weight as a result, demand for soft drinks must be highly sensitive to price changes. Economists describe the demand for such products as 'elastic.' Products that display high price elasticity include non-necessity or luxury items such as restaurant meals, fresh tomatoes, leisure travel and new cars.[6] A small increase in the price of these items will typically result in a large drop in demand.

 

Products that have low price elasticity (also called 'inelastic' demand) are those items people cannot do without over the short term and/or for which there are no easy substitutes. Examples here include gasoline, natural gas, medical services and coffee.

 

Research shows that a 10 per cent increase in the price of soda will decrease consumption by between eight and 10 per cent. This is considered to be in the range of moderately inelastic. Other work puts the elasticity of carbonated sugar-sweetened beverages in a similar range.

 

If soda demand is generally and moderately inelastic, the scope for using taxes to significantly change demand is limited. Small tax increases will not lead to a noticeable drop in consumption. This is why some food tax advocates have taken to suggesting much larger taxes − in the range of 20 per cent and above − to create perceptible changes in consumer behaviour. The need to greatly expand the size of recommended food taxes can be seen in similar arguments made in Britain advocating a 17.5 per cent fat tax.[7] The inelasticity of soft drinks and other foods is driving the move to much bigger recommended tax rates.

 

A health tax may sound like a good idea. But, the only proven impact such a tax would have is to force Islanders to pay more tax for something that would have no proven impact on their individual health.

 

2. Education campaign on drinks

 

Given that the Province is running an almost $60 million budget deficit, and Island taxpayers pay the third highest income taxes in all of Canada, is now really when the Province should be spending money on things like advertising campaigns about drinking pop?

 

The public already gets information about the calories, sugar and ingredients of the drinks on the labels. We want to see the government focus on delivering services that actually matter to Canadians like health care, education and good roads. And let’s leave the decision about what to eat or drink to individuals and parents.

 

We salute you for putting out this discussion paper and allowing groups like ours the opportunity to share some of the information that we have gathered over the past few years on this issue.

 

We look forward to having more discussions about these issues in the future.

 

Sincerely,

 

 

 

Kevin Lacey

Atlantic Director

Canadian Taxpayers Federation

 

877-909-5757

[email protected]

 

 

N.B. This letter includes excerpts from CTF’s report on food and drink taxes called “Tax on the Menu”. A full copy of the report can be found HERE

[1]Statistics Canada, 2013 Table 002-0011 “Food Available in Canada,” CANSIM. Soft drinks (litres per person), adjusted for losses, waste and spoilage.

[2] Vanselow, Michelle et al. "Adolescent beverage habits and changes in weight over time: findings from Project EAT." American Journal of Clinical Nutrition December 2009. Volume 90 Issue 6. Abstract viewable at http://www.ncbi.nlm.nih.gov/pubmed/19864412

[3] Janssen, I et al. "Comparison of overweight and obesity prevalence in school-aged youth from 34 countries and their relationships with physical activity and dietary patterns." Obesity Reviews May 2005. Volume 6 Issue 2. Abstract viewable at http://www.ncbi.nlm.nih.gov/pubmed/15836463

[4] Danyliw, Adrienne et al. "Beverage patterns among Canadian children and relationship to overweight and obesity." Applied Physiology, Nutrition and Metabolism June 2012. Volume 37 Number 5 Accessed at http://www.nrcresearchpress.com/doi/pdf/10.1139/h2012-074

[5] Veugelers, Paul and Angela Fitzgerald "Prevalence of and risk factors for childhood overweight and obesity," Canadian Medical Association Journal. Sept. 13, 2005. Volume 173 Issue 6. Accessed at http://www.cmaj.ca/content/173/6/607.full.pdf+html

[6] Anderson, Patrick L. et al. "Price Elasticity of Demand." Mackinac Center for Public Policy, Nov. 13, 1997. Accessed at http://www.mackinac.org/article.aspx?ID=1247

[7] Mytton, Oliver et al. "Could targeted food taxes improve health?" Journal of Epidemiology and Community Health August 2007. Volume 61, Number 8. Accessed at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2652984/