Insurance lobby calls for tax cuts

The insurance industry yesterday added its voice to those calling on the Minister for Finance to hold firm on his commitment to lower the corporation tax rate to 12.5 per cent in next week's budget.

Cautioning that any increase in overheads would lead to higher premiums, the Irish Insurance Federation (IIF) said it was vital that wage inflation was redressed through a reduction in corporation tax.

The IIF urged the Government to resist the temptation to raise employee and employer PRSI contributions, insisting such a move would damage competitiveness.

Rather than raising taxes, the Government should seek to keep the economy on track by reining in public spending, said IIF chief executive Mr Michael Kemp.

He called on the Government to abolish 2 per cent stamp duty on non-life insurance premiums, as recommended by the Motor Insurance Advisory Board report in its assessment of the sector earlier this year.

Failing this, the Government should invest funds raised by the charge in road safety campaigns and in a policy holder protection fund, to be drawn on in the event of insolvency of a motor insurer.

Should the Government move to implement the advisory board's report, it must ensure that adequate funding is provided, the IIF said.

It also called on Mr McCreevy to address the deepening complexity of the pensions system.

"Different rules apply to different types of pension arrangements, leading to confusion in the minds of those funding for retirement," Mr Kemp said.

Instead of simplifying the issue, the introduction of personal retirement saving accounts had merely furthered public bewilderment.

The federation criticised what it described as illogical limits on tax breaks afforded to pension holders based on their ages.

It called on the Government to address the discrepancy by increasing the limit for tax relief for pension contributors aged between 30 and 49.

Mr Kemp said section 958 of the Taxes Consolidation Act 1997 should be amended to extend to life and non-life insurance companies the option currently available for small companies to calculate preliminary tax payments by reference to the previous year's liability.

The IIF represents 53 life and non-life insurance companies, with a total workforce of 12,000.