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A city in Kentucky facing a budget deficit is mulling the decision to increase its tax on insurance premiums.
Greg Fischer, mayor of Louisville, recently proposed the idea to raise insurance premiums tax in order to avoid budget cuts that his administration had planned last week.
“We have to fight for the future of our city and invest in the future of our city,” he said.
The tax would translate into $37 million for the upcoming budget.
While the tax falls on insurance companies, insurers would likely pass the cost on to their customers, translating into higher insurance premiums.
“Ultimately, it's just like any tax: With the gas tax, oil companies don't pay it,” Louisville Kentucky Insurance owner David Cronin told Louisville Courier Journal. “It's more money coming out of the average person's pocket.”
The planned tax increase would affect home, marine, and life insurance premiums – but not auto insurance.
Fisher proposed that insurance premium taxes would increase from 5% to 12.5% in the upcoming budget and the next. The tax would then rise to 13.5% in fiscal year 2022, then 15% by fiscal year 2023.
A report from the mayor’s office said that the proposed tax would increase an average Louisville family's home insurance by $12 to $13 per month.
