January 15, 2008 by Canadian Underwriter
Insurance Bureau of Canada (IBC) has reiterated its long-standing call to the government of Newfoundland and Labrador to remove taxes on insurance premiums.
“The people of Newfoundland and Labrador have the highest insurance tax burden in the G8,” Don Forgeron, vice-president, Atlantic, Insurance Bureau of Canada, said in a release. “For every dollar of home, car and business insurance they buy, the provincial government charges them 19.6 cents in tax. This adds up to $80 million annually.”
He adds: “These unnecessary taxes are an unfair burden on homeowners and drivers, for whom insurance is a vital product. Premium taxes are also an impediment to businesses and not-for-profit organizations. Because these taxes are levied as a percentage of insurance premiums, organizations that face higher risk are also hit with more tax. Sectors most severely affected include not-for-profits, the hospitality industry and exporters.”
The IBC has stated its objections to the province’s high level of insurance tax in government submissions for many years.
Compared to other jurisdictions, the tax problem in Newfoundland and Labrador has been clear since the IBC commissioned a tax study by tax expert Jack Mintz in 2002, the IBC notes.
The IBC-led, multi-stakeholder Atlantic Task Force on Insurance Availability and Affordability called for the elimination of premium taxes in the province recently, the release notes.
“In the fall of 2006, the government of Newfoundland and Labrador said it would review the level of tax on insurance products. Insurance buyers deserve a decision soon,” the IBC writes.