Centre for Science in the Public Interest

For the Record

For Immediate Release:
March 5, 2004

Related Links:
Proposal for an Effective Integrated Pan-Canadian Healthy Living Strategy

For more information:
Bill Jeffery, CSPI's National Coordinator,
at (613) 244-7337.

   Pre-budget consultations Measures to help reduce the $6 billion to $10 billion annual burden of health care costs
March 5, 2004
Hon. Ralph Goodale, PC, MP
Minister of Finance
Department of Finance Canada
19th floor, East Tower
140 O'Connor Street
Ottawa, Ontario K1A 0G5

Re: Pre-budget consultations Inexpensive measures to help reduce the $6 billion to $10 billion annual burden of health care costs and lost productivity due to preventable diet- and inactivity-related disease

Dear Minister Goodale:

I am writing on behalf of the Centre for Science in the Public Interest (CSPI) to urge you to earmark $100 million in new money,1 and use several fiscal policy levers to demonstrate a federal government commitment to implementing the "Integrated Pan-Canadian Healthy Living Strategy" and giving effect to the 2004 Throne Speech commitment to "improving the overall health of Canadians — starting with health promotion to help reduce the incidence of avoidable disease."2

Concrete action is necessary to help reduce the $6 billion to $10 billion economic toll and 25,000 to 47,000 premature deaths attributable to diet- and inactivity-related disease annually in Canada. In its October 2002 World Health Report, the World Health Organization also estimated that average healthy life expectancy can be increased by over 6 years in countries like Canada by addressing six health risk factors: four diet-related factors (blood cholesterol, blood pressure, overweight, and low fruit and vegetable intake), as well as smoking and physical inactivity. We have urged that the federal, provincial and territorial ministers of health take aggressive measures to curb the human and economic toll of diet- and inactivity-related disease. Thus far, the Healthy Living Strategy has not produced any concrete policy or spending commitments.

As one analyst put it:

We have been too much consumed with the supply side of the health care equation and too little concerned with the demand side. The best way to reduce costs and improve health at the same time...is...to reduce the need and demand for care...The costs of medical care are in large part a function of the amount of illness in a population. The amount of morbidity, in turn, is related in part to the prevalence of smoking, dietary fat intake, seat belt use, lack of exercise, and other behavioural risk factors in the population.3

Many of the measures we advocate do not involve the expenditure of public funds but, instead, employ regulatory tools to limit the capacity of companies to externalize the costs of selling high-calorie, nutrient-poor foods, or products that promote sedentary living. In that vein, we urge you to support and encourage efforts on the part of your Cabinet colleagues to promulgate regulations to improve food product labelling, restrict advertising directed at children, control marketing of breast-milk substitutes, and ensure that occupational health and safety protection also reflect health promotion imperatives (particularly in workplaces where most jobs involve sedentary work).

However, we would like to highlight four specific issues that are directly relevant to the federal budget namely: the taxability of food, the deductibility of corporate food advertising expenditures, funding for preventative nutrition counselling services under Medicare, and funding for mass media campaigns to promote healthy eating and physical fitness.

  1. Publicly-funding preventative nutrition counselling services: In dedicating itself to responsible financial stewardship of public funds, the Department of Finance should ensure that adequate financial resources are allocated to preventing the development of chronic non-communicable disease. Preventing disease reduces the costs of health care services, increases the productivity of Canadians (thereby contributing to the other side of the health care ledger), and limits waiting times for diagnostic and treatment services. As such, fiscal prudence dictates that the federal government at least conduct a feasibility study (possibly commissioned jointly with the provinces) of the provision of preventative nutrition counselling services under provincial Medicare programs.
  2. Shifting sales taxes from healthful to unhealthful foods: Currently, approximately 35% to 45% of Canadian food sales are subject to GST and (in most provinces) PST drawing approximately $3 billion in federal and provincial tax revenue. However, federal sales tax law (which closely mirrors most provincial sales tax laws) promotes unhealthy diets by, in many cases, imposing GST on healthy food choices (such as low fat milk, and many salads and vegetable dishes when sold in restaurants, as well as club soda, fruit trays, certain sizes of bottled water, etc. sold in retail stores). Meanwhile, many unhealthful foods are tax-free (i.e., zero-rated for GST) such as sugary breakfast cereal, high-fat cheese, coffee cream, and high fat ground beef, etc., sold in retail stores.
  3. While it is true that some provisions of the federal Excise Tax Act appear to acknowledge the importance of nutrition in imposing taxes on candy, soft drinks, and snack food, the Act also creates a number of financial incentives to consume unhealthful foods, disincentives to consume healthful food and (unlike for tobacco and alcohol) fails to consistently draw revenue from the sale of unhealthful food products that make the largest contribution to ill-health. In short, federal and provincial rules governing the taxation of food require immediate reform to ensure that they reflect health promotion priorities of the Government.4

  4. Reforming rules governing tax deductibility of advertizing expenses from food company income: According to ACNielsen, $720 million was spent to advertize restaurants, food and alcohol in 1998.5 In the absence of vigorous ongoing publicly-funded promotion of healthy eating, commercial food advertisements — mainly for high-calorie, nutrient-poor foods -- have become the de facto nutrition education in Canada for children and adults. Accordingly, to help encourage a healthier balance of food advertisements, we propose that companies advertising fruits, vegetables, and other healthful foods be permitted to claim a deduction from taxable income equivalent to 300% of funds actually spent on advertising. Similarly, we propose to limit the deduction available for foods subject to GST (according to our above proposal) to only 50% of the monies actually spent on advertising. These refinements to tax avoidance rules would help ensure that public health care budgets are better able to finance health care delivery for diet-related diseases, and could encourage manufacturers to devote comparatively more marketing resources to promoting nutritious foods.
  5. National nutrition and physical activity communications campaign: We urge the federal government to dedicate $100 million per year to design model community-wide fitness and nutrition campaign kits (including advertisements for print, TV, and radio; contacts for local self-help groups, support and counselling; information about risk factor screening and education; ideas for designing and promoting community events and creating walking trails, and cycling paths, etc.) for implementation by local non-profit health organizations, as well as federal, provincial and municipal governments. The federal government should support the implementation of local programs by regularly purchasing advertising space to promote nutrition, physical activity, and healthy body image messages on nationally televised TV and radio programs.

N.B.: For non-fiscal recommendations for public policy reform to reduce the human and economic toll of diet-related disease, see the attached "Proposal for an Effective Pan Canadian Healthy Living Strategy."

Policies aimed at preventing disease can improve the health of Canadians, and also increase the health of public finances on both sides of the ledger by decreasing health care costs and increasing productivity of Canadians. In short, health promotion measures are both socially and fiscally prudent.

Preventative disease risk reduction measures designed to improve nutrition and increase physical activity could also act as a bulwark against the rising health care costs associated with the ageing baby boom population. As demographer David Foot noted,

The Canadian health care system...has a bias toward acute care — that is, the patient gets help when disease causes a serious episode of ill health. The system doesn't focus enough on preventative medicine to avoid such episodes.6 [emphasis added]

While funding the pursuit of cures and the best treatments for chronic diseases such as cancer, cardiovascular disease and diabetes is essential, dietary improvement and increased physical activity offer tremendous untapped potential to reduce disease incidence rates, the economic and human burden of preventable disease, and both diagnostic and treatment waiting lists.

If you have any questions, please call me at (613) 244-7337. We look forward to seeing means of preventing diet- and inactivity-related chronic disease reflected in the upcoming budget and election platforms.

Respectfully submitted,

Bill Jeffery, L.LB.
National Coordinator

att.   Proposal for an Effective Pan Canadian Healthy Living Strategy
cc.   Hon. Pierre Pettrigrew, P.C., M.P., Minister of Health,
Dr. Carolyn Bennett, Minister of State (Public Health),
Party Leaders and Chairs of the Election Platform Committees of the Liberal Party, Conservative Party, New Democratic Party, and the Bloc Québécois, and
Provincial Ministers of Finance and Health.


1.  This level of funding is comparable to the $480 million financial commitment, over five years, the federal government made to support its anti-tobacco strategy. That investment is partly credited for the precipitous decline in smoking rates from 30% of the population to 21% during the past 10 years.

2.  CSPI is a non-profit health advocacy organization specializing in food issues, with offices in Ottawa and Washington, D.C. Our Ottawa advocacy office is funded by 100,000 subscribers to the Canadian edition of Nutrition Action Healthletter. CSPI does not accept funding from industry or government and Nutrition Action does not carry advertisements.

3.  Fries J, Koop E, et al. Beyond health promotion: Reducing the need and demand for medical care — Health care reforms to improve health while reducing costs. Health Affairs 1998;17(2):70-71

4.  Our proposal for revising the current Excise Tax Act definition of "Basic Groceries" to bring the principles underlying the decade-old GST rules into accord with modern understanding of the relationship between diet and disease can be found in our recommendations to the Romanow Commission ( at http://cspinet.org/canada/pdf/romanow_submission.pdf at PDF pages 15-23).

5.  McElgunn J. Canada's top 25 advertising categories. Marketing Magazine September 27, 1999:44.

6.  David K. Foot, Boom, Bust & Echo 2000, (Toronto: Stoddart Publishing, 1999) at 232.

CSPI Canada