Alberta drivers could save roughly $100 a year if the province cuts these 2 insurance taxes
CBC
Did you know that there are two major provincial taxes added to your automobile insurance premium that could be costing you upwards of $100 a year?
Most Albertans are unaware because the taxes typically aren't shown on policies, said the Insurance Bureau of Canada (IBC). It wants the Alberta government to get rid of them while it looks at long-term reforms to save drivers costs.
"Given the significant concerns around affordability, this would provide a pretty short-term solution to help improve the price drivers are paying moving forward," said Aaron Sutherland, vice-president of the insurance bureau, in an interview with CBC News.
One of the taxes is a four per cent insurance premiums tax that is also added to other types of insurance, though at lower rates in some cases.
The other tax is a health cost recovery levy, which covers estimated costs to Alberta's health-care system from collisions. It's expected to increase by 28 per cent this year to roughly $30 per policy, generating $86.8 million for the province, according to Sutherland.
That increase was calculated through numbers provided to insurers by the province, he explained.
Meanwhile, the province has put a 3.7 per cent cap on how much insurers can raise premiums for "good drivers" this year.
"The government has said [it has] an objective of improving affordability for drivers in their auto insurance. But the province controls the health levy, and the health levy is going up 28 per cent," said Sutherland.
"That is going to be working in direct contrast to government-stated objectives on the auto insurance file."
Alberta drivers continue to pay some of the highest insurance premiums in the country.
The Canadian Federation of Independent Business (CFIB) has joined IBC in its calls to remove these taxes. It represents roughly 10,000 small businesses in Alberta with five or fewer employees.
Andrew Sennyah, Alberta's senior policy analyst for CFIB, said these small businesses are being hit particularly hard by insurance costs — especially those with fleets of vehicles.
Its latest monthly business barometer report shows 70 per cent of the Alberta businesses it represents listed insurance costs as a major cost constraint to their operations, only tax and electricity costs were listed more often.
"It's been that major input cost constraint for approximately 11 months throughout 2023," said Sennyah.
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