£11.6 billion hike in Insurance Premium Tax over the course of this Parliament
- Insurance Premium Tax has doubled over the last 18 months
- Three consecutive rises have brought the rate to 10 per cent
- TaxPayers' Alliance calls on Chancellor to reject another hike at next week's Budget - and instead cut it to give taxpayers a break
In the light of recent reports that businesses and consumers may be hit with yet another rise in Insurance Premium Tax (IPT) at next week's Budget, the TaxPayers' Alliance is calling on the Chancellor to reject this tax hike. He should cut it instead, so the news that the Chancellor has ordered an urgent review into the policy is heartening.
The Government has been stealthily increasing the rate of Insurance Premium Tax, which has doubled in the last 18 months. And at the last Autumn Statement, the Chancellor justified his hike by saying it is half the rate of VAT (20 per cent). As the Institute of Fiscal Studies argued at the time, this is a false equivalence - and if we wanted IPT equivalent to VAT, it should actually be cut to "much less" than its current rate of 10 per cent.
Given that consumers and businesses will already pay a staggering £11.6 billion extra in IPT during this Parliament, any further increases would be an extraordinary raid on taxpayers' pockets.
Groups such as homeowners, young drivers and holiday-makers will suffer with increases in IPT. Indeed, the TaxPayers' Alliance has previously drawn attention to this tax as part of its Holiday Tax campaign.
John O'Connell, Chief Executive of the TaxPayers' Alliance, said: "This arbitrarily high tax is simply a revenue-generating tool for the Treasury at the expense of businesses, consumers and taxpayers. The Chancellor has hinted at bringing it up to the same level as VAT, but that would be treading a dangerous path towards even more misery for low income groups like young drivers using their cars to get to work. The Government should call off future increases and cut it instead."
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