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Press Release

PCI Says Insurers Face Double Taxation Under Nevada Margin Tax Initiative: If voters approve in 2014, insurance rates could increase

Published on Tue, Mar 5, 2013 (2:32 p.m.)

Contact: Nicole Mahrt Ganley
Phone: 916-440-1116 or cell 916-616-5855
Email: [email protected]


FOR RELEASE ON RECEIPT
March 5, 2013
PCI Says Insurers Face Double Taxation Under Nevada Margin Tax Initiative: If voters approve in 2014, insurance rates could increase

Carson City, Nevada – A 2014 ballot initiative proposing a 2 percent margin tax on the revenue of businesses with over $1 million in annual income will double tax property-casualty insurers and could cause insurance rates to increase for Nevada residents, says the Property Casualty Insurers Association of America (PCI).
Initiative Petition 1 is a ballot initiative qualified for the Nevada 2014 ballot by the Nevada State Education Association to raise an estimated $800 million annually for K-12 education. 150,000 signatures have been collected to qualify the initiative. This initiative will be debated today during a joint hearing of the Senate Revenue Committee and the Assembly Taxation Committee. Regardless of any action taken by the Nevada State Legislature, IP 1 will be on the ballot in 2014.
“P-C insurers will be hit with double taxation if Nevada voters approve this initiative. Insurers currently pay premium taxes in lieu of other taxes paid by other businesses in Nevada. Insurers’ premium taxes are the fourth largest source of revenue to Nevada’s General Fund representing 8.1 percent of the state’s revenue,” said Mark Sektnan, PCI vice president. “Insurers operating in Nevada pay a 3.5 percent premium tax rate on gross premiums. This is much higher than the national average premium tax of less than 2 percent. Nevada has the third highest premium tax rate in the country. If this initiative is approved in 2014, insurers will face paying both the premium tax and the margin tax.”
Most states impose premium taxes on insurance companies in lieu of any other state and local taxes. Premium taxes are a higher and more stable source of tax income to the state treasury. Insurers also fund the Nevada Division of Insurance and fraud fighting efforts conducted by the Attorney General’s Office.
“If insurers are not exempted from this initiative, Nevada domiciled insurers will face retaliatory taxes in other states they do business in,” said Sektnan. “Nevada based insurers will be less competitive in other states. Nevada’s higher taxation will increase costs and could lead to higher auto and homeowners insurance rates throughout Nevada. This initiative will impose heavier economic burdens for Nevada residents and businesses who are mandated to carry auto and workers compensation insurance.”
P-C insurers are a major contributor to Nevada’s economy by employing over 1,100 people with a payroll of $81.4 million according to 2011 data. Insurers also invested $5.9 billion in Nevada municipal bonds and paid out $2.7 billion to Nevada policyholders through claims payments.
“Given Nevada’s weak economy and struggling housing market, now is the wrong time to increase costs for businesses and residents,” said Sektnan. “Nevada lawmakers should do whatever they can within their power to stop this initiative from becoming law and hurting Nevada taxpayers and businesses.”

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $190 billion in annual premium, 40 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 38 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

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