Newfoundland and Labrador eliminate insurance premium tax

Newfoundland and Labrador’s Department of Finance has retroactively eliminated the provincial 15% retail sales tax (RST) on insurance premiums.
Effective immediately, insurers are no longer required to collect the tax.
If a person purchased or renewed a contract of insurance on or after Jan. 1, 2008, that person will receive a refund of the tax paid, a statement from the Department of Finance says.
The tax was the highest of its kind in any of the G8 countries. Broker and insurer associations, as well as consumer groups and business associations, have been calling on the government for years to remove or lower the tax, arguing that it puts them at a disadvantage compared to their provincial counterparts.
The annual cost to the provincial treasury of removing RDT on insurance premiums will be about Cdn$94 million this fiscal year, and Cdn$75 million annually thereafter.
“While we need to impose taxes to provide health care, education and other public services, this particular tax just did not seem fair and many have advocated for its elimination,” Premier Danny Williams told the House of Assembly.
When the government assumed office in 2003, large deficits made it impossible to eliminate the tax at that time, Williams continued.
“As circumstances improved, we had many priorities to address before we could address this problem.”