Manitoba’s new tax on insurance hurts consumers, says CLHIA
Starting July 1, 2012, sales tax will be applied to some insurance premiums in Manitoba.
As part of the province’s 2012 budget, a seven percent Retail Sales Tax (RST) will be applied to property and casualty insurance, group life insurance, trip cancellation insurance, baggage insurance and land titles insurance. Tax will not be applied to health, accident or sickness, Autopac or individual life insurance.
Canada’s life and health insurers have expressed their “deep concern and disappointment” with the Manitoba government’s imposition the RST on individual disability insurance, critical illness insurance and group disability insurance coverages.
“This is not good public policy,” said Frank Swedlove, President of the Canadian Life and Health Insurance Association (CLHIA) in a statement.
“Discouraging Manitobans from protecting their families and businesses may ultimately add to the province’s fiscal burden rather than generating positive net revenue,” Swedlove added. A press release points to an example if Manitobans could no longer afford privately administered disability and critical illness due to this tax burden. The CLHIA said the public sector will need to provide funding for needs that are currently covered by those products. ”A sales tax on group insurance policies would also raise costs for Manitoba companies, putting them at a disadvantage with regards to their competitors in other provinces,” the Association added.
Manitoba-based Great-West Life and Wawanesa Life are both members of the CLHIA.
The Insurance Bureau of Canada (IBC) estimated that the tax will cost Manitoba consumers an extra $48 million, based on 2010 premium data. Following the tabling of the budget, IBC said it was “very disappointed” by the tax decision, calling it “even more punitive” when one considers that consumers will be paying an effective tax rate of 11.5 percent on insurance premiums.
