Alliance: We'll Battle N.Y. Gov's Insurance Tax

By Daniel Hays

NU Online News Service, Feb. 4, 4:13 p.m. EST?An insurance trade group lobbyist promised today that insurers will fight "tooth and nail" against a budget proposal from New York Gov. George Pataki to boost the premium tax on carriers by $150 million.

The opposition was voiced by John Cucci, Northeast regional vice president for the Alliance of American Insurers, who confessed that he expects an uphill battle given a two-year budget gap that Mr. Pataki said stands at $11.5 billion.

But he said the Alliance "will certainly try and lobby against any increase or a smaller increase. We don't think we should be picked on when the auto [insurance] market is in the tank. And with problems with asbestos and mold claims, this could make things worse," he said.

Mr. Pataki's budget, unveiled last week, also includes an additional charge for vehicle owners insurance.

By the Alliance's estimate, under the Pataki Administration proposal the taxes paid on premium would increase 22.5 percent to more than $900 million.

The increase would result from a change in method. Currently with property-casualty insurers, there is a bifurcated tax of a 1.3 percent premium with a 7.5 percent income tax with a cap equal to 2 percent of premium.

Life insurers currently have a 0.7 percent premium tax with a 7.5 percent income tax component--also capped at 2 percent.

Under the new budget scheme, companies would pay a straight 2 percent premium tax.

Another proposal calls for a $1 per vehicle policy fee that motorists pay towards theft and fraud prevention being raised to $5. In addition, there would be a provision allowing local counties the option of collecting another $5.

"It's a horrible budget deficit year and they [the legislature] are going to try and get money any way they can. But we will be fighting this tooth and nail. This is not the time to raise taxes on companies," Mr. Cucci said.

Mr. Cucci noted that Mr. Pataki had said the proposed change in the revenue stream was not a tax increase. "But the net result is taxes go up," Mr. Cucci said. "It's a semantic game."

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Alliance: We'll Battle N.Y. Gov's Insurance Tax

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