The Canadian Federation of Independent Business (CFIB) and the Insurance Bureau of Canada (IBC) wants the province to axe two taxes that are charged on every auto insurance policy in the province, which add approximately $100 to every driver's insurance policy each year.
In a release, the IBC and CFIB explained that the province charges drivers a 4 per cent Insurance Premium Tax (IPT) on every driver's auto insurance policy along with a levy on auto insurance to recover health care costs.
"The amount of tax collected through the IPT has grown by 28 per cent since 2018, and has resulted in over $1 billion in increased costs to Alberta's drivers. The levy to recover healthcare costs is also set to increase by 28 per cent in 2024. This levy is added to the cost of auto insurance premiums and is rising to $86.8 million this year," IBC stated.
Annie Dormuth, CFIB's Alberta Provincial Affairs Director underlined that the Throne Speech last fall committed to affordability and insurance reforms that would reduce premium costs. She said a quick and effective way for the government to make good on that promise would be to either pause or reduce the IPT.
In the fall throne speech which was delivered by Salma Lakhani, Lieutenant Governor of Alberta, insurance costs were enumerated with the speech stating that, 'insurance premiums are another cost-of-living pressure that this government must act on.'
Insurance affordability was also something Premier Smith mentioned in her mandate letter to Finance Minister, Nate Horner.
"As lead, working with the Minister of Affordability and Utilities and stakeholders to review and develop short and long-term recommendations to make automobile and property insurance more affordable for Albertans," Premier Smith wrote.
The government did commit to implementing a series of reforms to limit increases to premiums for drivers who had safe driving records. Those reforms were meant to take place at the beginning of January. However, Dormuth said that more is needed to be done and there needs to be greater transparency on the matter.
"When drivers go to renew their insurance or go under a new plan, there is, a provincial tax on insurance; I know we are in Alberta where the concept of a course sales tax is not seen on any of our bills. But yes, there is an insurance tax," she said. "The only way you can find it is if you dig into the provincial budget and find it as a line item."
However, the province has said that it is exploring all options. Savannah Johannsen, a spokesperson for the President of the Treasury Board and Minister of Finance, wrote in reply that there is movement on the issue.
"We have commissioned an external consultant to conduct an in-depth analysis to inform long-term reforms. The insurance models of other jurisdictions – both within Canada and abroad are also being analyzed. The results of the analysis will help inform the government’s decision to implement sustainable, long-term solutions to address auto insurance affordability in Alberta."
A report published by Ernst & Young LLP in 2022 found that Albertans pay some of the highest prices for auto insurance in the country.
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