NL government cuts auto insurance tax by 2%

Published: January 7, 2019

Updated: February 1, 2019

Author: Luke Jones



The auto insurance landscape in Newfoundland and Labrador is hardly serene at the moment. However, consumers in the province are getting some good news to start 2019. The provincial government has announced a reduction on its auto insurance premium tax.

In a press release, the NL government says it is reducing the tax by 2%, from 15% to 13%. Furthermore, ongoing reductions of 1% are planned for Jan. 01 in 2020, 2021, and 2022.

It seems the government is kicking off this year trying to appeal to motorists. Alongside the auto insurance tax decrease, the 4% tax on gas and 5% tax on diesel has been removed completely. Newfoundland and Labrador’s Department of Finance says it will recoup the costs through the federal government’s carbon tax. This mandated tax is at 4.42 cents for gasoline and 5.37 cents for diesel.

“The provincial government’s carbon pricing program maintains competitiveness for taxation and trade, minimizes the impact on consumers and vulnerable groups and recognizes the considerable cost the province is already paying to decarbonize electricity while delivering meaningful reductions in greenhouse gas emissions,” said the Department of Finance in a statement.

“While taxation is an important part of provincial revenue generation, as a government we must continue to adapt our approach to taxation to ensure that it is fair and equitable while supporting vital service delivery,” said Tom Osborne, Newfoundland and Labrador’s minister of finance.

“Tax changes announced in 2018 will have far-reaching positive impacts for citizens and businesses in Newfoundland and Labrador, and we remain committed to continuing our balanced approach to fiscal management in 2019.”

Struggling Auto Insurance System

Last year, a report into the auto insurance system in NL found major problems, making the province the most expensive car insurance market in the Atlantic region. A lack of choice and customer options have driven premiums upwards in recent years. On the flip side, private insurers say they are losing money in the province and some may have to leave the market if no reforms are made.