The Chancellor has dismayed responsible drivers and home owners with a further hike in Insurance Premium Tax, according to the AA.
IPT already hits the millions of people taking out car and home insurance but in addition it is a tax on breakdown cover. The AA deplores this further burden on consumers when the combined impact of the previous two IPT increases in November 2015 and October 2016 has already added an extra £100 to the annual total insurance bill for many families.
Edmund King, AA President says: “It seems that the whiplash crackdown also confirmed by the Chancellor, which he says will reduce the average car insurance premium by £40, is the excuse to add another 2% to insurance premium tax. This means that in 18 months, tax on insurance will have doubled – no other tax has increased by that much.
“The Prime Minister has said she wants to help those who are just about managing and this tax increase has greatest impact on those least able to afford it, who are often in greatest need of the protection that insurance provides. We have called for IPT to be excluded for new, young drivers who pay the highest car insurance premiums but this has been ignored.
“The leap from 6% to 9.5% to 10%, and now 12%, insurance premium tax is a tax on responsible car ownership - as opposed to the lawless one million without motoring cover, mainly young male drivers, who leave the insurance industry to pick up the pieces through the Motor Insurers’ Bureau levy. Uninsured driving typically adds £30 to the average car insurance policy and by encouraging more young drivers to attempt to take to the road without cover will simply add to the insurance burden for everyone.”
“We have seen a 100% hike in this tax on motor insurance. This is not a luxury but a legal requirement for drivers. It’s also a tax on homeowners who take the responsibility for protecting their property.
“This is a backward step which could backfire with more uninsured drivers and higher costs that will ultimately be funded by higher premiums.”
King added: “Over recent years, drivers have learnt to beware of chancellors bearing gifts. Although more than five years of duty freezes have been welcome, what the Treasury has given with one hand has been taken back in spade loads from other motoring taxes.”
However, he welcomed the announcement to improve the transport infrastructure and encouragement for innovation, saying that they are overdue.
“The £390m investment in low emission vehicles and connected autonomous cars is also a good catalyst for development as is the £100m capital allowance help for electric vehicle infrastructure.”
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