Byles: 16.5% tax on insurance unfortunate
A seemingly disappointed Richard Byles, president and chief executive officer (CEO) of Sagicor Group Jamaica Limited, last night declared it an "unfortunate" move by the Government to apply a 16.5 per cent general consumption tax (GCT) to group health insurance effective April 3.
Finance Minister Audley Shaw disclosed during the opening of the 2017-18 Budget Debate that the Government was seeking $1.9 billion in revenue from group health insurance.
"I wish we didn't have it because health insurance costs tend to move a little faster than inflation. A lot of them are indexed to US dollars, so even when our inflation is fairly low, like last year, you find that medical inflation still moves further. It's just a little more pressure on individuals and small and medium companies that are already struggling with premiums that are moving ahead of inflation."
Stating that only a mere 30 per cent of the workforce is currently insured, Byles disclosed that he didn't expect a direct impact on insurance companies.
"It's going to be a shared cost between the company and the employee. Sure, it puts pressure on the product. It's just like any other product. If the price goes up, selling it is that much harder, so a product that is 16.5 per cent more expensive must be under a little pressure. I wish we could have closed the deficit some other way because it costs that individual worker who is taking the bus or taxi to work or buying gas to come to work. It hits them hard."
The increased costs are to be reflected on monthly premiums with Sagicor to collect and remit to the Government.