The Canadian Life & Health Insurance Association (CLHIA) has published its February submission to Chrystia Freeland, deputy prime minister and minister of Finance Canada ahead of the government’s release of the 2023 Federal budget. In it, the association calls for the government to support workplace health benefits plans through several different initiatives and considerations, to leverage the industry’s investment capacity for infrastructure projects, to broaden the scope of retirement options available to Canadians and, notably, to scrap the 1.5 per cent tax financial institutions, including life insurers, announced in the 2022 Federal budget.
“We believe this higher corporate tax on banks and insurers is unfair, inequitable and not good tax policy. Profits made by corporations (other than small business corporations) should be taxed at the same rate as profit from any other business, whether that be oil and gas, grocery chains, pharmaceuticals, telecommunications or big box retail chains,” they write.
“The government’s rationale for continuing to impose a heavier tax burden on life and health insurance companies considering the vital financial services we provide to Canadians, especially in uncertain economic times, is not clear to us.”
In workplace group benefits plans, as with previous submissions made to provincial governments, the association advocates for the government to target dental care supports for those without access to existing coverage and offer a tax credit to small businesses to avoid putting coverage from workplace benefits plans at risk. It similarly asks that the new Canada Pharmacare Act focus on those without coverage.
The submission also considers employment insurance reform consultations and requests technical changes to Bill C-27 while work on the bill is advanced “expeditiously.”
“While the Personal Information Protection and Electronic Documents Act has served Canadians well for over 20 years, it is important that the update legal framework reflects the growing data-driven economy and new ways of protecting personal information,” they write. “Generally, the industry is supportive of the new privacy legislative framework as set out in Bill C-27. However, we believe that Bill C-27 can be enhanced with some key technical changes.”
The submission later calls for changes to legislation enacted in 2021 to enable the use of Advanced Life Deferred Annuities (ALDAs) and Variable Payment Life Annuities (VPLAs).
“VPLAs as enacted would only be available to members of very large defined contribution (DC) pension plans, excluding the millions of Canadians who work for smaller employers or save for their retirement through group and individual RRSPs, TFSAs, etc. While the government also enabled VPLAs within the pooled registered pension plans (PRPPs), this by itself will not allow Canadians to access VPLAs more broadly, as the accumulation levels in these plans do not have the necessary scale,” they write. “We believe that standalone VPLAs should be permitted to pool participants.”
In the same vein, they also ask for TFSA liquidity requirements to be waived to allow Canadians to make use of life annuities within a TFSA.
