Insurers object to new tax proposal; plan to lobby against Treasury |
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Published
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Tue, 04 Oct 2005 16:05
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LONDON: Life insurers lashed out at the Treasury yesterday for launching new tax regulations without warning or consulting the industry. The Association of British Insurers said this seemed like a “smash and grab” on the savings industry.
A member of the Association said they were very disappointed with the way the government was making significant changes to the tax system. They planned to lobby heavily over the next week to have the new tax proposals amended or scrapped.
For the Treasury this is simply a measure to prevent tax avoidance by some insurers who took advantage of earlier rules to avoid tax by reducing taxable gains or showing artificial losses. A Treasury spokesperson said the revision was aimed at non (with-) profit firms that have assets or profits exceeding the amount required to achieve their business goals.
Some insurers are believed to value life funds below market rates; then there are also some mutual insurers who choose not to show surplus cash in their funds before a demutualisation. The Treasury spokesman said the new regulations would deny such insurers a chance to evade their obligation.
On the other side, insurers insist that the new tax proposal cuts into their surplus capital which was a necessity and had to be maintained to meet funding rules. They believed they were being punished for holding this excess capital.
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