Florida TaxWatch cautions the Legislature not to repeal an insurance premium tax credit designed to encourage insurance company jobs in Florida -- at least not until it has fully assessed the impacts of what it would be like to live without it.
SB 1832, a bill that would effect the repeal,arose suddenly and is scheduled tobe heard by only one committee -- the SenateAppropriations Committee.
In a briefing issued Thursday -- available here -- the Tallahassee-based independent government watchdog group argued that for at least the last 60 years, Florida's tax policy regarding insurance companies has provided a clear preference to companies that had a presence in Florida.
Since 1988, said TaxWatch, that preference has been in the form of a credit against a company's insurance premium taxes of 15 percent of the salaries paid to Florida-based employees. It was intended to promote the insurance industry in Florida, a desirable, clean industry with relatively high-paying jobs.
"Reversing this longstanding policy of promoting the growth of one of the state's target industries without fully evaluating the potential effects on both existing insurers and the growth of the industry, its high-paying jobs and capital in Florida should not be undertaken," said Dominic M. Calabro, president and CEO of Florida TaxWatch.
In addition, the briefing raises concerns such as the already high rate of taxation of the insurance industry; the effect of retaliatory taxes on both state revenues and insurer taxes; the perception of the stability of Florida's tax structure; and the effect that a $230 million tax increase would have on the premiums Floridians pay.
The proposed tax increase is intended to make up for the revenue lost by the roll-back of some motor vehicle registration fees that were increased in 2009.
Kurt Wenner, TaxWatch vice president for tax research, commented that, "Insurance companies will likely increase premiums to make up for this $230 million tax increase. The $12 a person saves when registering their vehicle would be at least partially offset by the higher premiums they will end up paying."