Winnipeg Free Press - PRINT EDITION
The head of the city's firefighters' union says new PST revenue should be earmarked for an insurance program for low-income renters.
That's the group devastated by a series of house and apartment fires over the winter, when entire blocks burned, leaving poor tenants with no resources to set up new households.
Higher taxes -- good policy?
Starting July 1, the province will charge provincial sales tax on a host of insurance premiums that were previously exempt from PST. Here's the fine print.
Property insurance
It's hard to know what the average Winnipegger will pay when PST is applied to home insurance policies because rate calculations are complex, based on a home's location, size and discounts for things such as alarm systems. As an example, though, a modest 1,000-square-foot home in St. James with a finished basement and no garage might cost $600 to $800 a year to insure. The owner of such a home might expect to pay an extra $40 or $55 a year in PST.
Group life insurance
Many companies, though not all, cover the cost of group life insurance programs. For a medium-sized company that pays $140,000 a year in group life insurance premiums, the extra charge would be just under $10,000 a year. Federal sales tax isn't charged on group life insurance premiums.
Trip cancellation and baggage insurance
The cost for trip cancellation insurance can vary significantly. If you're a senior taking a big, multi-week holiday, you might pay $700 for trip insurance just in case something goes wrong. The PST will add another $50 to that. If you are just taking a weekend jaunt to Vancouver, the extra PST might only come to a couple of dollars. But, as Daryl Silver, president of Continental Travel, points out, vacations are already one of the most heavily taxed purchases Canadians make.
Just before Christmas, United Fire Fighters of Winnipeg president Alex Forrest pledged to lobby the province, landlords and the insurance industry to solve the problem.
The province announced in Tuesday's budget it would start charging PST on a batch of insurance services, including home and tenant insurance. Taxing tenant insurance won't encourage more low-income renters to sign up, but Forrest said the move could offer a new solution.
"Can we have a small slice of this revenue for people who really can't afford basic renter's insurance?" asked Forrest, who has spoken to cabinet ministers about the issue over the last few months. "Even $9 a month might be a hardship for some people. Can we subsidize some of that?"
The new PST charges will bring in nearly twice as much revenue as the hike to the gasoline tax, which earned much the attention during this week's budget debate. In addition to property insurance premiums, provincial sales tax will be levied on group life insurance premiums, a move that might not sit well with employers and employees.
"Applying the provincial sales tax to group life insurance premiums will of course increase costs for plan sponsors and, in many cases, employees, and will likely not be welcomed," said Marlene Klassen, Great-West Life's assistant vice-president for communication.
The province said Ontario has charged PST on some insurance premiums since 1994, and Manitoba is simply following suit.
PST won't be added to premiums paid for health or accident insurance, Autopac, individual life insurance or crop insurance.
The province says the move will raise an extra $85.5 million.
maryagnes.welch@freepress.mb.ca
Republished from the Winnipeg Free Press print edition April 21, 2012 B2
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