Nfld. & Labrador

Auto insurance tax dips 2 percentage points in 2019

Don't plan that tropical vacation just yet.

Provincial gov't eliminates gas tax but federal carbon tax kicks in

Automobile owners are seeing a slight drop in the insurance premium tax introduced in the 2016 provincial budget. (Eddy Kennedy/CBC)

When the clock ticked from 2018 to 2019, two new provincial tax changes came into effect.

The tax on automobile insurance premiums, introduced in the 2016 budget, has been reduced by two percentage points, from 15 per cent to 13 per cent. The province's finance department said in a statement Thursday that there will be further reductions of a single percentage point each year in 2020, 2021 and 2022.

But before you head out on shopping spree, consider this: the two percentage-point reduction on a monthly premium of, for example, $150 represents a savings of $3 a month.

Jan. 1 first also marked the elimination of the provincial government's four-cent gas tax, as well as the additional five-cent tax on diesel fuel. The reduction is offset, though, by the federally mandated carbon tax that kicked in at the same time: 4.42 cents on gasoline and 5.37 cents on diesel.

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