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    • Heavy tax burden outlined in report on p&c industry
        (Copyright Thompson’s World Insurance News
        Not to be redistributed by individual recipients.)
        Canada’s p&c insurance industry bears a tax rate of 67% — among the highest rate measured around the world by PricewaterhouseCoopers.
        Insurers have protested the heavy burden for many years and now they have more compelling fuel for their case.
        A PwC study commissioned by the Insurance Bureau of Canada entitled ‘Total Tax Contribution and Regulatory Costs Borne by the Property and Casualty Insurance Industry (Canada),’ found that the industry bears and collects selected taxes and regulatory costs which represent a whopping 13.8% of the average insurance policy premium paid by consumers.
        Not surprisingly, the industry is a major contributor to the Canadian provincial and federal tax regimes, with a total tax contribution of $6.2bn (the sum of total taxes borne plus total taxes collected).
        Taxes borne are cash taxes incurred by a business that affect the income statement, such as income taxes, payroll taxes, and in the case of the p&c industry, also the GST and provincial sales taxes on claims, and the provincial insurance premium taxes and levies for health care.
        Taxes collected are cash taxes that aren’t a business cost but are collected on behalf of a government agency from others and include payroll taxes and provincial sales taxes on insurance policies.
        The study shows that the total taxes borne by the industry in 2008 were $4.3bn, of which $0.6bn was income taxes.
        “This means that for each $1 of income taxes the industry paid, it absorbed an additional $5.63 in other taxes,” PwC said.
        More in our April 26 2010 edition
        
    		 


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