The TaxPayers' Alliance today calls for the chancellor, Philip Hammond, to rule out any further increase in insurance premium tax
. In the 2016 autumn statement, the chancellor hinted that insurance tax could ultimately end up on par with VAT (20 per cent). If it does, then it would be one of the government’s top 10 tax revenues. John O'Connell, Chief Executive of the TaxPayers' Alliance
, said:"This tax had already been doubled in the past two years, a hike that will benefit the treasury's bean-counters but will hurt responsible consumers. It cannot be right to make it more expensive for taxpayers to do the right thing and buy insurance to protect themselves and their businesses. The Government should rule out any future increases and cut it instead."
A further IPT increase would act as a tax on responsibility
, hurting those who do the right thing and buy insurance to protect themselves. It is a regressive tax that hurts those who need insurance the most and least able to afford an increase, like young drivers or small businesses at risk of flooding.
Imagine a young driver, dependant on a car to get to work, who is priced out of driving due to the ever-increasing cost of insurance tax. Do they quit work or drive uninsured? That is not a choice they should have to make. Rightly, 8 in 10 people (82%) are now concerned that increasing insurance tax will see more people drive without insurance*.
The Institute for Fiscal Studies has highlighted
how increasing IPT to the same level as VAT would be damaging. They have suggested that a low single-digit rate would be more appropriate to consumers.