Gov’t urged to cut agricultural insurance tax
An international research organization expressed its support for the reduction of taxes imposed on agricultural insurance to accelerate farm activity.In a webinar hosted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca), the think tank asserted agri-finance expert and Ramon Magsaysay awardee Jaime Aristotle Alip’s recommendation to make agricultural insurance more accessible by cutting the tax on agricultural insurance premiums.
According to Alip, taxes on non-life insurance, including those for crops, must be around the rate for life insurance at 2 percent. Currently, non-life insurance premiums are taxed between 26 and 27 percent.
Alip said this would usually hinder several members of the private sector from offering agricultural insurance to farmers and fishers due to perceived risks in the industry. He added the government does not need to subsidize agricultural insurance as the entry of more players would make insurance offerings market-driven.
“If you want private sector participation, you must level the playing field,” he said. “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.”
Searca noted insurance and loan guarantees were important in financing marginalized farmers.
This would especially be timely with the persistence of African swine fever in hogs, the previous bird flu outbreaks in Luzon, the ongoing La Niña that is adversely affecting sugar farms in Negros, and a number of typhoons that ravage farm crops year after year.
All of these are happening against the backdrop of the COVID-19 pandemic.
The Department of Finance has been lobbying to change the charter of the Philippine Crop Insurance Corp. and convert it into a reinsurer. This is to open the agricultural insurance industry to competition and improve financial protection being offered to farmers and fishers.
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