Fri. Mar 1st, 2024

Call to delete taxes to reduce auto insurance costs in Alberta

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The Alberta government says an external consultant is analyzing insurance models elsewhere to inform long-term reforms to make auto insurance more affordable in the province.


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In Alberta, insurance advocates and businesses are calling on the provincial government to consider eliminating two types of taxes it collects on auto insurance, to help drivers save about $100 a year.

The taxes thus referred to are those which are added to automobile insurance premiums.

One of them is a 4% tax on insurance premiums. It also applies to other types of insurance, although at lower rates in some cases.

The other tax is a health cost recovery levy, which covers the estimated costs of collisions to Alberta's health system. It's expected to rise 28 percent this year, to about $30 per policy. This will bring $86.8 million to the province, according to Aaron Sutherland, vice-president of the Insurance Bureau of Canada (IBC).

The IBC explains that most Albertans are unaware of these taxes because they are not generally listed on insurance policies. The organization, which represents most damage insurers in the country, therefore wants the Alberta government to get rid of it.

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Given significant concerns around affordability, this would provide a short-term solution to help improve the price motorists pay in the future.

A quote from Aaron Sutherland, Vice President du BAC

Meanwhile, the province has capped the increase in premiums insurers can charge good drivers at 3.7% this year.

According to Mr. Sutherland, all these actions taken by the province go against its stated objectives in terms of auto insurance, namely that the government says it wants to relieve the wallets of motorists.

Alberta drivers continue to pay some of the highest insurance premiums in the country.

The Canadian Federation of Independent Business (CFIB) has joined the IBC in calling for the removal of these taxes. It represents approximately 10,000 Alberta small businesses with five or fewer employees.

According to Andrew Sennyah, CFIB senior policy analyst for #x27;In Alberta, small businesses are particularly affected by insurance costs, especially those that own vehicle fleets.

The latest monthly CFIB Business Barometer report shows 70 per cent of the Alberta businesses it represents cited insurance costs as one of the top barriers to doing business. Only taxes and electricity costs were cited more often.

This will be the main constraint on input costs for about 11 months in 2023, says Sennyah, noting that many Alberta businesses are already facing costs related to the increase. property taxes and emergency loan repayments from the Canada Emergency Business Account (CEBA).

If the government is considering reducing costs and improving affordability measures, this is an opportunity to do so one month before the budget presentation.

A quote from Andrew Sennyah, CFIB for Alberta

Savannah Johannsen is the press secretary for the Department of Treasury and Finance of the x27; Alberta. She argues that both taxes are paid into the general revenue fund to support the province's services and programs.

According to her, the health tax had decreased significantly during the pandemic due to reduced driving habits and injuries from collisions, but now that these habits have almost returned to their previous levels the pandemic, the tax has increased.

The government is studying all possible options to making auto insurance more affordable in Alberta and takes into account all recommendations from Albertans and insurance experts.

A quote from Savannah Johannsen, Alberta Department of Finance

< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">She indicates that an external consultant is analyzing insurance models around the world – including Alberta's –, to inform long-term reforms aimed at making auto insurance more affordable in the province.

With information from Karina Zapata

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