Posted on 20 May 2010
The Coalition for Competitive Insurance Rates (CCIR) on Wednesday commended the European Union for speaking out against a controversial tax proposal on affiliated reinsurance included in President Obama's FY2011 budget proposal.
In a series of letters sent to top U.S. government officials, Angelos Pangratis, acting head of the European Union Delegation to the United States expressed the EU's opposition to the proposal, which aims to deny tax deductions to foreign based insurers and reinsurers. The budget proposal is similar to HR 3424, a bill sponsored by U.S. Rep. Richard Neal (D-MA).
The letters to OMB Director Peter Orszag, Treasury Secretary Timothy Geithner, and U.S. Trade Representative Ron Kirk, warn that the proposal would be at odds with U.S. trade agreements, including the WTO General Agreement on Trade in Services.
"This penal tax regime would only apply to foreign-owned insurers; thus it would not result in protecting the U.S. tax base, but in creating a disadvantageous tax environment for foreign insurance providers," warned Pangratis. "This could result in higher premiums for U.S. policy holders or even the withdrawal of non-U.S. operators from the U.S. reinsurance business leading to job losses for many U.S. citizens employed by those companies."