By Robyn Hall. . The Conservative Party is backing a national lobbying campaign against insurance ...
By Robyn Hall.
.
The Conservative Party is backing a national lobbying campaign against insurance premium tax (IPT), the strongest signal yet given that the levy would not be increased if the Tories were to regain power.
The move comes amid concerns that IPT could increase to a standard rate of 12.5% in the next Budget, which would lead to large increases in health insurance premiums. IPT is currently at 5% but was increased by a quarter from 4% in this year's Budget.
In a letter to the National Campaign Against Insurance Premium Tax (NCAIPT), William Hague, the Leader of the Opposition, wrote: "It is clear that Labour's increase in IPT has been caused by its failure to keep public spending under control, and by its desire to hide its tax increases in the small print of the Budget.
"The rise in IPT is one of Labour's £40.7bn of extra stealth taxes being raised over the lifetime of this Parliament.
"We have persistently highlighted and opposed Labour's stealth tax increases, including the rise in IPT. We will continue to oppose Labour's tax increase because we believe that the tax burden under Labour is too high.
"People have the right to expect that a Government elected on a promise not to increase taxes 'at all' should do what it promised.
The Tory leader added: "Our guarantee is that tax as a percentage of GDP will fall under the next Conservative government. This will make it impossible for future governments to raise taxes by stealth.
NCAIPT has been lobbying the Government against further IPT increases and for the abolition of the tax since September.
Philip Allott, campaign director, said the Tory leader's support had come at a crucial time and had provided a significant boost to the NCAIPTs support.
He said: "William Hague and Shadow Chancellor Francis Maude have given us their personal backing and both have said they will oppose any increases in IPT.
Maude told the NCAIPT: "It is clear that the increases under Labour are due to their need to fund their £37bn spending spree on welfare. We will continue to oppose Labour's tax increases because they have failed to keep their promise to cut welfare bills.
Allott added: "Several prominent Liberal Democrats are also supporting such a move, but the problem is that the Labour Government has such a large majority.
IPT was originally designed as a means of shifting the tax burden away from incomes and onto consumption. However, recent Budgets have seen the levy used to raise more revenue as the insurance industry has been too fragmented to present a cohesive argument against rate rises.
Allott said: "If the Government is so keen on charging the industry IPT why doesn't it switch to VAT? That way at least VAT-registered policyholders could claim back VAT on purchases, which is more than they can do now.
"The Government says that charging VAT is prevented by a 1972 EU exemption clause, which exempts policyholders from having to pay VAT. If that is the case, why do they have to pay IPT as it is also a tax.
The NCAIPT is scheduling a series of meetings with Government ministers and Whitehall officials in a bid to persuade the Chancellor of the Exchequer, Gordon Brown, to shelve any plans to raise the levy in the next Budget.
