Insurance Premium Tax (IPT) is a penalty for doing the responsible thing, let’s be blunt about it.
Those who dodge car insurance often end up with a fine that is one quarter of the cost of the premium. Those who don’t insure their life expect their family to club together to pay for a final send-off. Our tax system fails to reward those who take out insurance to spare others the costs when things go wrong. IPT is also an inherently unfair tax because it affects the poorest in society, the people who really need cover, by pushing up the price.
But politicians are unlikely to repeal IPT, and so BIBA is calling for some of the money raised from every policyholder to be reserved for spending on flood defences. Why? Because every winter we see the same misery on the news; people wading through sewage, lives turned upside down, businesses ruined. In the absence of common sense on regular clearing of drainage systems and rivers, at least those affected can see levies and dams built which may help prevent the same areas from flooding every few years.
Following the recent flooding in the north of England, the British Insurance Brokers’ Association (BIBA) has called upon the future Government to confirm that it will continue with its commitment to ring-fence money collected through insurance premium tax (IPT) for flood defence spending.
Graeme Trudgill, Executive Director of BIBA, said: “In 2016, the rate of IPT included on every home insurance policy increased from 9.5% to 10%, and Government said that this increase would be ring-fenced to pay for flood defence and resilience measures.
“With a whole host of spending commitments made by each of the major parties already in this election campaign, it is vital that this earmarked pot of money is not absorbed into general Government revenues and spent in other areas.
“The devastating effects of flooding upon both individuals and communities are clear, and our members help them recover and rebuild when the worst happens. Brokers tell us how important the protection afforded by flood defences is to their customers and to the wider economy.
“Defences save the UK around £1.1bn each year in flood prevention and aside from the considerable human importance defences offer, they represent excellent value for money.”