Jane Dotson
Mayor Greg Fischer proposed a plan to triple Louisville's insurance premium tax over four years to fund the city's rising pension obligations and prevent significant budget cuts. The tax hike would affect home, marine, and life insurance policies, with insurance premium taxes rising from 5% to 15% by fiscal year 2023. According to a report from the mayor's office, this would increase the average Louisville family's home insurance by $12 to $13 per month.
| Characteristics | Values |
|---|---|
| Reason for raising insurance tax | To fund the city's rising pension obligations and avoid major budget cuts |
| Estimated revenue from the tax increase | $63 million by 2023 |
| Insurance premium tax increase | From 5% to 12.5% in the upcoming budget, 13.5% in 2022, and 15% by 2023 |
| Impact on average Louisville family's home insurance | Increase of $12 to $13 per month |
| Excluded from the plan | Vehicle insurance due to its regressive impact on economically struggling individuals |
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What You'll Learn
- Louisville Mayor Greg Fischer wants to triple the insurance premium tax
- The increase will fund rising pension obligations and avoid budget cuts
- The tax increase is estimated to generate an additional $63 million by 2023
- The insurance premium tax hasn't been raised since the city and county governments merged in 2003
- The proposal will increase an average Louisville family's home insurance by $12 to $13 per month
Louisville Mayor Greg Fischer wants to triple the insurance premium tax
Louisville Mayor Greg Fischer has proposed tripling the city's insurance premium tax over the next four years to fund the city's rising pension obligations and prevent major cuts to the budget. The tax increase would be the first since the city and county governments merged in 2003. It would be levied on home, marine, and life insurance, among other miscellaneous policies, but not on vehicle insurance, to avoid disproportionately taxing the city's poorest residents.
The insurance premium tax, a little-noticed levy included in insurance payments, would rise from 5% to 12.5% in the upcoming budget and the next. It would then increase to 13.5% in the 2022 fiscal year and 15% by the 2023 fiscal year. According to a report from the mayor's office, this proposal would increase an average Louisville family's home insurance by $12 to $13 per month.
Mayor Fischer's proposal aims to address the city's $65 million budget challenge over the next four years, driven largely by increasing state pension obligations. The tax increase is expected to generate an additional $63 million by the 2023 fiscal year. Each percentage increase in the insurance premium tax would generate an estimated $12 million in revenue annually if all lines of insurance were to increase at an equal rate.
However, the proposed tax hike has faced opposition from some insurance agents and groups, who argue that it unfairly targets the insurance industry and makes Kentucky a less attractive place to do business. They suggest that the tax should be shared among all industries and residents. Additionally, there are concerns that responsible consumers who purchase insurance will be penalized, and there may be a wider impact on coverage decisions and risk for everyone in Metro Louisville.
Despite the opposition, Mayor Fischer and members of the Metro Council defend the proposal as a necessary measure to avoid devastating cuts to essential city services and ensure Louisville remains a competitive and vibrant city. They emphasize the importance of investing in services like worker retraining, policing, infrastructure, and parks to keep up with other cities. The decision to raise taxes is not taken lightly, and public input and votes are encouraged as part of the process.
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The increase will fund rising pension obligations and avoid budget cuts
Louisville Mayor Greg Fischer proposed a major insurance tax hike in 2019 to fund rising pension obligations and avoid budget cuts. The tax increase would be the first since the city and county governments merged in 2003. It would apply to home, marine, and life insurance policies, among others, but not vehicle insurance. This decision was made to avoid disproportionately taxing the city's poorest residents.
The insurance premium tax would increase from 5% to 12.5% in the upcoming budget and the next. It would then rise to 13.5% in fiscal year 2022 and 15% by fiscal year 2023. Each percentage increase in the insurance premium tax is expected to generate an estimated $12 million in revenue per year. Fischer's administration estimates that the tax increase will generate an additional $63 million by fiscal year 2023.
The proposal would increase an average Louisville family's home insurance by $12 to $13 per month, according to a report from the mayor's office. This increase in revenue will help cover the expected $65 million budget gap over the next four years. Without this new revenue source, the city would have to make significant cuts, including staffing reductions in nearly every city department and the closing of two fire stations and four public pools.
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The tax increase is estimated to generate an additional $63 million by 2023
Louisville Mayor Greg Fischer's administration estimates that the insurance tax increase would generate an additional $63 million by the fiscal year 2023. The increase in revenue would help the city meet its rising pension obligations and avoid major budget cuts. The proposal would increase an average Louisville family's home insurance by $12 to $13 per month.
The insurance premium tax would increase from 5% to 12.5% in the upcoming budget and the next. It would then rise to 13.5% in the fiscal year 2022 and finally to 15% by the fiscal year 2023. Each percentage increase in the insurance premium tax would generate an estimated $12 million in revenue per year if all lines of insurance were to increase at an equal rate.
The tax increase would apply to home, marine, and life insurance policies, among other miscellaneous policies. However, it would not include vehicle insurance to avoid disproportionately taxing the city's poorest residents. The last major tax hike in Louisville was over four decades ago when the insurance tax was increased from 2.5% to 5%.
The proposed insurance tax increase is part of Fischer's revenue plan to address the expected $65 million budget gap over the next four years. The alternative to increasing taxes would be to make significant cuts in city services and staffing reductions in nearly every city department.
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The insurance premium tax hasn't been raised since the city and county governments merged in 2003
Louisville Mayor Greg Fischer proposed raising the insurance premium tax in 2019 to avoid massive budget cuts. The tax increase would be the first since the city and county governments merged in 2003. The insurance premium tax, included in insurance payments, was previously raised from 2.5% to 5% decades ago. Fischer's proposal would increase the tax from 5% to 12.5% in the upcoming budget and the next, then to 13.5% in fiscal year 2022 and finally to 15% by fiscal year 2023.
Each percentage point increase in the insurance premium tax would generate an estimated $12 million in revenue per year, assuming all lines of insurance were increased at an equal rate and suburban cities implemented the same increase as Louisville Metro. The tax increase would generate an additional $63 million by fiscal year 2023, helping to address the expected $65 million budget gap over the next four years.
The proposal includes raising taxes on home, marine, and life insurance policies, among other miscellaneous policies. Notably, vehicle insurance was excluded from the proposal to avoid disproportionately impacting the city's poorest residents, as insurance rates are already higher in west Louisville. The increase in insurance premium tax is expected to raise an average Louisville family's home insurance by $12 to $13 per month.
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The proposal will increase an average Louisville family's home insurance by $12 to $13 per month
Louisville Mayor Greg Fischer proposed a major insurance tax hike in 2019 to avoid significant budget cuts. The tax increase would be the first since the city and county governments merged in 2003. The proposal would increase the insurance premium tax from 5% to 15% by fiscal year 2023. This incremental increase would be spread over four years, with the tax rising to 12.5% in the upcoming budget, 13.5% in fiscal year 2022, and finally 15% by fiscal year 2023.
The insurance premium tax is included in insurance payments but often goes unnoticed. The tax increase will apply to home, marine, and life insurance policies, among other miscellaneous policies. Notably, vehicle insurance was excluded from the proposal to avoid disproportionately impacting the city's poorest residents, as insurance rates are already higher in west Louisville.
The proposed tax hike aims to address the city's rising pension obligations and prevent major budget cuts. Without a new revenue source, Louisville faced a projected $65 million budget gap over the next four years. To fill this gap, the city considered various devastating" potential cuts, including staffing reductions across nearly every city department and the closure of fire stations and public pools.
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Frequently asked questions
Louisville Mayor Greg Fischer proposed raising insurance premium tax from 5% to 15% by 2023.
Fischer's administration estimates that the tax increase would generate an additional $63 million by the fiscal year 2023.
The tax increase is intended to fund the city's rising pension obligations and avoid major budget cuts.
The last time insurance tax was raised in Louisville was several decades ago, from 2.5% to the current 5%.
The tax increase will be levied on marine and life insurance policies, among other miscellaneous policies. Vehicle insurance was excluded from the proposal.
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