Insurance industry fights back over vehicle tag fees changes – Sun
The insurance industry is pushing back on a Senate proposal that would drop a tax credit enjoyed by out-of-state companies as a way to cover the cost of reducing an unpopular 2009 hike on vehicle-registration fees.
Sam Miller, executive vice president of the Florida Insurance Council, said he and other industry lobbyists intend to address the proposal (SB 7132) by Sen. Joe Negron, R-Stuart, when it goes before the Appropriations Committee on Thursday.
"With the repeal of this credit (insurance company) taxes will go up," Miller said. "This is a tax on these companies, and they're going to pass it along. Consumers are going to absorb it."
Negron, the chairman of the Appropriations Committee, said he expected the reaction from some in the insurance and business community when he announced the measure last week, but he remains confident lawmakers won't be swayed by industry lobbyists.
"I welcome the debate on whether we should subsidize the labor cost of the insurance industry or return money to our constituents," Negron said.
"I don't think it's good public policy for taxpayers to be underwriting part of the insurance industry labor costs and then that being a way to reduce premiums," Negron added. "The cost of premiums is a separate issue. The Office of Insurance Regulation should determine what the appropriate cost is."
Legislators have been considering replacing a number of existing business incentives as a means to offset other funding proposals. One prominent proposal would eliminate a tax incentive that international banks receive for locating facilities in Florida to balance a $3-million-a-year sales-tax rebate for the Miami Dolphins.
Negron has estimated that by eliminating the insurance-industry tax credit, which was established in 1987, motorists overall could see up to $220 million a year in savings if the 2009 vehicle registration-fee increase was cut in half.
Lawmakers made the controversial decision to raise fees on drivers as the state struggled with major economic problems. They were desperately seeking revenue but did not want to raise taxes.
Opponents said the increased fees were regressive – hurting poor people as much or more than the wealthy.
The move, which came as lawmakers faced a $6 billion budget shortfall, increased vehicle registration fees by 35 percent, as the cost of renewals, titles and driver licenses all were boosted.
The tax credit targeted by Negron covers 15 percent of salaries of non-licensed workers that out-of-state insurance companies employ in Florida.
Associated Industries of Florida voiced its opposition shortly after Negron proposed the bill last week, expressing concerns about reducing jobs and saying the salary credit has been an important tool in attracting out-of-state companies to set up offices, regional service centers and even call centers in Florida.
"While AIF supports reducing registration fees, we oppose the elimination of the credit which could have the unintended consequences of reducing jobs in Florida and making Florida less competitive for insurance companies' jobs," AIF stated in its daily legislative update on March 22.