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CA Governor Says Property Insurance Surcharge a Fee, Not a Tax

Source: IFA

Posted on 19 Jan 2010

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California Gov. Arnold Schwarzenegger is insisting that a new surcharge on all residential and commercial property insurance is a fee -- not a tax.

The "Sacramento Bee" reports that while Schwarzenegger was insistent at his recent budget presentation that his spending plan would not raise taxes, the surcharge is being seen as such by some state residents.

The 4.8% surcharge, which would cost about $48 per policyholder, will help pay for the California Department of Forestry and Fire Protection and would relieve the state’s general fund by $200 million through June 2011, according to the report.

The surcharge would go into effect in January 2011. Most homeowners will be unable to deduct it on their federal taxes because it is not being implemented as a property tax.

Schwarzenegger told the paper his office considers the surcharge “a fee.”

“I let some people debate over that – what’s a fee and what’s a tax,” the governor told the Bee. “But I mean, I call it a fee.”