A group of non-life insurers is seeking government support to slash the tax on non-life products, following a congressman’s vow to pursue a bill that will make the industry at par with its regional peers.
Philippine Insurers and Reinsurers Association (PIRA) Deputy Chairman Michael Rellosa said Marikina Rep. Romero Quimbo committed to support the tax cut during the industry group’s recent convention.
“We are keeping our fingers crossed, hopefully the Department of Finance (DOF) sees the wisdom of this looking forward,” Rellosa said.
The bill is proposing the reduction of taxes imposed on non-life insurance premiums to 8 percent from 27.5 percent, the same rate as in other countries in the region.
Speaking at the recent PIRA conference, Quimbo told insurance executives it was simply illogical for the government to charge a 27.5-percent tax on non-life insurance when such products allow people to help themselves and not rely on government assistance in times of disasters.
“We live in one of the most disaster-prone countries in the world, which makes it truly ironic that we have one of the highest taxes for non-life insurance. It doesn’t make sense. You tax something that you do not want people to buy. In our case, we should be encouraging our people to buy insurance as a way of empowering them,” he said.
Quimbo also argued that it was unfair for the government to tax buyers of car or home insurance at 27.5 percent of the premiums they pay, while those buying life insurance are only paying 5 percent.
“It must at least be equal if not lower,” he said.
Quimbo presented to insurance executives his long-overdue proposal for the revision of income tax brackets and reduce the tax burden of more than six million Filipino workers.
Just like the bill filed by Rep. Karlo Nograles of Davao that seeks to lower the overall tax on non-life insurance to 5 percent to match that of the life sector, Quimbo’s proposed measure didn’t pass the previous Congress because of opposition from the DOF.
Quimbo said taxes on insurance must be simple, efficient and equitable to taxpayers.