Prohibitive tax mires crop insurance growth

  • 5 April 2021
  • Source/s: Malaya

Prohibitive tax on agriculture insurance premium is a disincentive for insurers, an expert said.

Jaime Aristotle Alip, chairman emeritus and pioneering founder of the Center for Agriculture and Rural Development Inc.-Mutually Reinforcing Institutions, said tax on non-life insurance, including those for crop or agriculture insurance should be around the rate of life insurance which is only at a minimal 2 percent.

At present, tax on crop insurance premiums is about the same as non-life’s, 26 to 27 percent.

“If you want private sector participation, you must level the playing field. You should lower down non-life premium tax (including tax for crop or agriculture insurance). There will be many private sector players (given this),” Alip said in a virtual forum hosted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture.

Alip said insurance or a guarantee program for farmers’ loans will encourage banks to lend even to small stakeholders.

He said insurance is also an important safety net so that poor farmers “will not slide back to poverty.”

“It will be the law of numbers and the law of efficiency (that will work). The gap must be addressed. Lawmakers should make non-life insurance affordable,” he added.