Looking for a Healthy Tax Break

Benjamin Franklin famously said, “In this world nothing is certain but death and taxes.” A coalition of groups involved in natural health products and services would like to ease the burden of the latter for those who take care to delay the former.

The Canadian Self-Care Tax Reform Coalition is lobbying the federal government to allow income tax deductions for natural health products, such as vitamins and supplements, as medical expenses. Anne Wilkie, the Canadian Health Food Association’s head of regulatory affairs and newly appointed vice president, appeared before the government’s standing committee on finance to ask for changes in the January 2007 budget to allow the deductions.

“It would work in the same way that pharmaceutical products currently are deducted from your income tax,” Wilkie told alive in a phone interview from Toronto. “What we would like to see is that any product meeting the definition of a natural health product would be included in this deduction.”

Defining What’s Deductible

Although Wilkie is optimistic that the government will listen–and indeed, one Conservative MP has introduced a private members’ bill calling for the deductions–the initiative faces numerous challenges. Currently, products that are prescribed as medically necessary are tax deductible, but over-the-counter products are not. (In a few rare cases, deductions have been allowed when a medical professional has prescribed natural health products to someone with severe health problems.) However, some might argue that if vitamins are tax deductible, then foods that contain vitamins or other healthy properties such as antioxidants should also be included.

“Obviously, one of the real difficulties with this issue is that the edges of it are so broad and ill-defined, and to administer a tax system, you have to draw the line somewhere,” said David MacLean, dean of the faculty of health sciences at Simon Fraser University.

It could be difficult to determine what would be eligible for tax deductions. “I think, unfortunately, the needs of bureaucracy and fairness require some process by which fairness can be judged,” MacLean said. “If you get it [vitamin] from orange juice, should you be allowed to deduct it? I’m sure the makers of orange juice would like you to be able to.”

Wilkie noted recent regulations governing natural health products would make the process easier. “They would have to have a natural health product number on them,” she said. “All the natural health products in Canada are currently going through this regulatory process to apply for product licences. There are about 15,000 they are currently working on, but there are up to about 55,000 that will go through the process before the end of 2009.” (The government plans to have the review completed by 2010.)

As for allowing deductions for other healthy products, Wilkie said, “That might be a claim in the future, but for now we’re looking at natural health products because we know they can reduce health care costs significantly in this country.”

Vote for Vitamins

Joy Smith, Conservative MP for Kildonan-St. Paul, Manitoba, introduced a bill last year that mirrors the coalition’s recommendation, but she doesn’t see all vitamins and supplements becoming tax deductible. “The purpose of this private members’ bill is to acknowledge that vitamins and vitamin supplements are widely used, particularly by seniors, and that under doctors’ recommendation they should be tax deductible,” she explained.

Smith believes the government could get behind the idea. “We’re doing things in a new way because health care is one of the biggest issues in our country, and with an aging demographic, that’s something we really have to look at,” she said.

One MP who has been introducing a private members’ bill regarding natural health products every year since 1998 isn’t as hopeful. Peter Stoffer, NDP member for Sackville-Eastern Shore, Nova Scotia, has been promoting a bill that would allow deductions for herbal or natural alternatives that are prescribed by a health professional.

“If a doctor prescribes to you, say, St. John’s wort as an alleviant for your pain or suffering, then you should be able to claim that as a tax deduction, [as] a prescription drug,” Stoffer said, adding that he doesn’t see much hope of over-the-counter vitamins and supplements becoming tax deductible. “Then you expand that to Aspirin, Tylenol, cough medicines, right? And you might as well make those tax deductible as well, if that’s your thinking,” he said. “Because that’s what the government would say. I can appreciate why a person wants to include vitamin or nutrient supplements; I just can’t see any government buying into that. It’s something I support, but I don’t think it’s going to go anywhere.”

Wilkie, however, remains confident, especially in light of the Conservative party’s pre-election policy proposal to “improve access to natural and complementary health products and supplements.”

“We know that [the] is supportive of what’s happening in the increased use of [these] products, so we are quite excited by that,” she said, adding that the coalition is “hoping to see if we can get the parties to combine those bills and in that way gain more support for them.”

Smith said it’s something she might consider. “The common goal here would be to help Canadian families so they could get the prescriptions that they need and get the medicines, the vitamins, the supplements they need for better health.”

Wilkie realizes that the precarious position of the current minority government means the coalition has to stay on top of the issue. “With any change in government you have to educate the new government to the issues that are important to your industry,” she said. “We had done that with the Liberals when they were in power. We’ve been working hard to bring the Conservatives up to speed on our issues as well.

“I think it’s something that we need to continue to evaluate. I can’t say exactly what the time frame will be, but we’re very hopeful that it will be accomplished sooner rather than later.”

Canada Sets the Standard

Because of lobbying in 1990 by the CHFA, Canada now has some of the most careful controls for natural health products, according to Wilkie. Under the new classification system, the industry has to provide proof that the products are safe and effective.

“When they make [health] claims, they have to provide the backup for the claims. The ingredients must be fully disclosed; the labels must have directions for use and for contraindications, if necessary. Our Canadian regulations are now the most advanced in the world. Canada is literally setting the standard.”

The fact that the initiative has drawn the support of MPs from one end of the political spectrum to the other means that it can, at least, avoid the pitfalls of partisan politics.

For more information on what the Canadian Health Food Association is doing to promote tax deductions for natural health products, visit chfa.ca/default.asp?action=article—ID=149.

Health Canada's website includes information about natural health products; it lists the products that have been classified and ensures that claims can be verified. hc-sc.gc.ca/dhp-mps/prodnatur/index_e.html