Revised tax plan could reduce financial strain on insurance companies
Insurance companies in Connecticut are praising a proposed tax change that could result in some financial breathing room. Governor Dannel Malloy and several other lawmakers have proposed a significant change to a tax plan that would have placed the insurance industry under greater financial pressure. The tax plan does not target the industry specifically, but it would have an impact on insurers as the tax plan has to do with data processing.
Original tax plan had called for an increase in the sales tax on data processing services of 3%
The tax plan had initially called for in increase in the sales tax of computer and data processing from 1% to 3%. Large insurers, as well as other companies, had expressed concern about this increase, as it would lead to a significant increase in expenditures. The insurance industry heavily relies on data processing to conduct business effectively. Many insurers rely on data processing services, the cost of which is affected by sales tax.
Governor Malloy wants to keep the sales tax level at 1%
Governor Malloy and other lawmakers have now called for keeping sales tax on data processing services at 1%. The move has drawn the support of several prominent insurance companies, including Aetna and Travelers. Insurers suggest that keeping the tax at its current level would be a benefit for businesses in several sectors. The Hartford, one of the largest insurance providers in the state, suggests that a higher tax would have a negative impact on small and medium-sized businesses, restricting their growth potential in the future.
Data processing services allow the insurance industry to develop better products
The insurance industry has a long history with data processing. The data that insurers collect allow them to better understand the risks they face in myriad sectors, which allows them to develop better products for consumers and other businesses. Insurers have shown strong support for the revised tax plan and many companies are petitioning lawmakers to support the new plan as well. Whether the tax plan will be approved before lawmakers adjourn for vacation is not yet clear.