A measure to reduce New Hampshire's insurance premium tax from two to one percent has been approved by a committee of the legislature.
House Ways and Means Committee approved HB 678 – the Premium Tax Reduction Bill, on a 16-2 vote after several hours of debate over the legislation's economic merits .
The bill phases in a reduction of the insurance premium tax from two percent to one percent for insurers domiciled in New Hampshire.
Frank O'Brien, vice president, regional manager and counsel Property Casualty Insurers Association of America (PCI), forecast the measure would stimulate economic growth in the state.
"Over the last decade the state has experienced a significant loss of insurance companies that were domesticated in New Hampshire. The loss of a domestic insurance company to another state takes revenue, jobs and investment from the state. However, reductions in the premium tax rate are an effective way to spur growth within a state because it helps to retain current companies and recruit new companies, " Mr. O'Brien commented.
According to PCI states that have lowered their insurance premium taxes have experienced economic gains as insurers have moved to incorporate in those states.
States that lowered their insurance premium tax rates have found that investment by insurers in the form of new employment, acquisition of property, and consumption of services have stimulated economic growth, PCI said.
"By reducing the insurance premium tax, New Hampshire will give itself a competitive advantage over other states with higher rates," Mr. O'Brien said.
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