HARTFORD, CT—With little fanfare, Democratic Gov. Dannel P. Malloy, said in a press release Monday that he plans to lower taxes on the insurance industry when he releases his two-year budget on Feb. 8.
The insurance premium tax rate will drop from 1.75 percent to 1.5 percent. By lowering the rate, the state will lose about $11 million in 2018 and $22 million in 2019. However, the reduction in state revenue is worth it for an industry that provides 58,000 jobs in the state.
“The insurance industry has a long and storied history in Connecticut, and we must ensure that we maintain our competitive edge so that they continue to thrive and grow in our state,” Malloy said in a press release. “Restructuring and lowering the premium tax will substantially improve market conditions for Connecticut-based insurance companies. This change will save them millions in taxes paid to other states across the country.”
The proposal was applauded by Republican lawmakers.
“We thank the governor and applaud his efforts to support Connecticut’s insurance industry and help reduce the burdens on Connecticut companies,” Senate Republican President Len Fasano, R-North Haven, and Sen. Kevin Kelly, R-Stratford, said. “Due to the retaliatory tax structure in other states, this proposal will help Connecticut insurance companies in their business transactions throughout the country. Our state must work hard to preserve Connecticut’s historic role as the insurance capital of the world. This proposal is a smart step forward.”
The industry also expressed its support.
“This initiative will encourage Connecticut based insurers to grow and compete more aggressively across the country.,” Eric George, president of the Insurance Association of Connecticut, said. “We eagerly await to learn the details of this proposal and the IAC is happy with the governor’s decision to lower the tax.”
Earlier this year, Malloy signaled he would like to make changes to Connecticut’s tax system that would be favorable to businesses.
Last January, General Electric announced it was moving its headquarters to Boston. The high-profile loss of GE prompted Connecticut lawmakers and the governor to reconsider their tax structure.