ABI calls on Treasury to redress windfall from hard rates
The ABI has written to the Treasury this week calling for a cut in insurance premium tax (IPT).
The call comes less than a month before April's Budget.
The ABI called for a 1% cut in the tax, arguing that huge premium increases since 11 September will give the Treasury a windfall.
"We're drawing attention to the concerns raised by customers of insurers about the burden of IPT at a time when premium rates are having to rise," an ABI spokesman said.
"We're arguing that, precisely because of these rate rises, the government, we calculate, will make at least £400m additional money from IPT in the 2002-2003 tax year."
He said the premium-related increase in IPT collected was equivalent to a 1% rise in the tax.
"We wanted to put our views on the record and draw attention to the windfall already received by the Treasury," the spokesman said.
Meanwhile, Labour MP for Newport West Paul Flynn has launched a vicious attack on the insurance industry over IPT.
Flynn was one of 600 MPs contacted by the National Campaign against IPT in a bid to head off any increase in IPT.
Campaign project director Philip Allott said its letter pointed out that the Treasury would receive £1.8bn from IPT in 2002-2003, without any increase.
Allott warned that a rise in IPT could harm UK insurers' chances of competing with overseas competitors.
In reply, Flynn described the letter as "self-serving pleading from the insurance industry".
"Many insurance policies are close to being fraudulent," he wrote.
"Most people would be far better off accepting the risk themselves.
"I would be very supportive of the chancellor's plans to increase the rate of tax on insurance companies so that many of their damaging activities can be curbed."
Allott said he was "disgusted" by Flynn's response.
"Thousands of jobs depend on the insurance industry, including, no doubt, many of Mr Flynn's constituents," he said.
