Newfoundland and Labrador to reduce retail sales tax on auto insurance

Newfoundland and Labrador has announced a plan to reduce the retail sales tax on auto insurance that was first introduced in the province in 2016.

In its 2018 budget, tabled Tuesday, the government promised to cut the tax by 5% per cent over four years, starting with a 2% reduction on January 1, 2019. The Insurance Bureau of Canada (IBC) has expressed support for the move.

Related: IBC reacts to the federal budget

“Auto premiums in Newfoundland and Labrador are already the highest in the Atlantic region,” Tom O’Handley, manager of government relations for IBC’s Atlantic region, said in a news release. “This change will make auto insurance more affordable for consumers and that is a very positive move.”

IBC has expressed concerns about Newfoundland and Labrador’s current auto insurance system, which it says gives drivers little choice between insurers and charges premiums that are 40% higher than anywhere else in Atlantic Canada, leading some people to drive without insurance.

Other notable measures in the budget include $1 million set aside for flood risk mapping and forecasting in Mud Lake and Happy Valley-Goose Bay, which is downstream from the Muskrat Falls project. The government is also committing $200,000 a year to monitoring ice thickness and weather.

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