Another increase in Insurance Premium Tax (IPT) will be a double blow for business at a time when the UK economy faces a ‘cocktail of threats' the ABI warned today.
The warning follows new figures published today that show that last November's IPT increase could cost business nearly £500m in higher commercial insurance premiums, including health insurance.
Further increases to IPT could cost business nearly £150m per 1% increase, the association said.
It could also increase lower spending power of its customers - as many families face insurance bills around £100 higher as a result of the last increase
The warning follows the decision to increase IPT by more than 50% - from 6% to 9.5% - at the summer 2015 budget, raising £8bn over five years- the biggest revenue raiser in the budget.
The ABI's director of general insurance policy, James Dalton, said: "IPT is a tax on businesses that will hit companies that do the right thing.
"It could drive up costs of commercial insurance at a time when economic risks are growing. Unlike VAT, no element of IPT can be reclaimed by businesses meaning they will have to absorb these extra costs - this could cost jobs, drive up prices or companies may decide to reduce cover, putting them at risk if something goes wrong.
"On top of all this a rise in IPT hits demand by reducing consumer spending power. The IPT increase last November could cost business in the UK about £500m. Another rise on top of this would be a double blow for business."
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