- Legislation filed in the Senate could have a detrimental effect on the insurance industry, which employs more than 200,000 people in Florida. Senate Bill 378 would eliminate the insurance premium tax credit for insurers, the impact of which is highlighted in the latest report by Florida TaxWatch, the state’s premier non-partisan government watchdog.
Florida’s insurance premium tax code has always provided a preference to in-state insurers in order to promote the development of this sought-after industry. Since 1988, Florida insurance companies have been given a credit against a company’s insurance premium taxes of 15 percent of the salaries paid to Florida-based employees. This credit was afforded to insurance companies in order to lessen a significant tax increase imposed on the industry.
SB 378 aims to eliminate this credit to pay for cuts to the Business Rent Tax but the report shows that the legislation would have negative consequences for Florida. While Florida TaxWatch supports cutting the Business Rent Tax, the bill would create a major increase in an insurance company’s tax bill, resulting in fewer jobs for Floridians, a loss of investment in the state by insurance companies and higher premiums for policy holders.
"People do not like paying for insurance to begin with and the amount they pay is already increasing rapidly. If this legislation passes, Floridians will pay even more for insurance due to this massive $300 million tax increase,” said Florida TaxWatch President and CEO Dominic M. Calabro.
The report states that most states use credits and other tax benefits to give a preference to domestic insurers, hoping to encourage investment in their state. Competition, both nationally and globally, is increasing and with all of Florida’s immediate neighbors having significant incentives for insurers, the loss of the salary credit would make those and other states even more attractive.
Read the full report here