2013 Prince Edward Island Budget SubmissionRelease Date: 02/21/2013 Staff Reference: Peggy McFarland
February 21, 2013
Honourable Wesley J. Sheridan
Minister of Finance, Energy and Municipal Affairs
PO Box 2000
95 Rochford Street, 2nd Floor, Shaw Building
Charlottetown, Prince Edward Island C1A 7N8
Please find enclosed a submission from the Canadian Life and Health Insurance Association (CLHIA) on your forthcoming Budget.
Established in 1894, CLHIA represents life and health insurers accounting for 99% of the business in Canada. The life and health insurance industry is a major contributor to Prince Edward Island’s economy with almost $3.5 billion invested in the province. Last year, the industry paid over $215 million in benefits to Islanders through life and health insurance products including life insurance, annuities, RRSPs, disability insurance and supplementary health plans.
The industry commends PEI for its prudent approach to fiscal management and its commitment to balance its budget by 2015. The industry supports PEI’s efforts to improve the competitiveness of its economy. A competitive tax and business environment is critical to encourage economic growth and investment.
Unfortunately, PEI imposes a 3.5% premium tax, the second highest rate in Canada, on health, disability and life insurance plans. This constitutes a significant financial disincentive for employers to provide and for individuals to purchase these coverages, even though these plans make major contributions to reducing pressures on PEI's public finances. The submission recommends that PEI resist any suggestions to impose a provincial Retail Sales Tax on insurance premiums, and, as fiscal circumstances permit, reduce the existing premium tax on life and health insurance premiums to 2%, which is comparable to other jurisdictions, and eventually eliminate it. This would encourage employers and individual Islanders to maintain or expand life and health insurance protection for their employees and families.
This submission also recommends that Prince Edward Island, working in parallel with other provinces and pension stakeholders, build on the framework established by the federal government via November's Bill C-25 and enact measures to facilitate the provision of Pooled Registered Pension Plans (PRPPs). These arrangements are prudent, efficiently-managed, private pension plans, that would be available to Island workers, particularly within smaller businesses and the self-employed, thus vastly improving access to a pension plan for Islanders.
CLHIA appreciates the opportunity to contribute to PEI's pre-budget consultation process. If you or your staff require any further information on these matters, my colleagues and I are at your disposal.
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