Decreases the premium receipts tax for surplus lines insurance coverage.
Impact
A2749 is poised to benefit individuals and businesses in need of surplus lines insurance by making it more affordable. The reduction in the premium receipts tax could make it easier for insureds to maintain necessary coverages that are otherwise limited in availability. Additionally, the bill details that the entire 3% tax will go to the treasurer of the New Jersey State Firemen's Association for fire insurance policies in municipalities with incorporated firemen's relief associations, preserving dedicated funding that directly supports fire-related services in local communities.
Summary
Assembly Bill A2749 aims to decrease the premium receipts tax on surplus lines insurance coverage from 5% to 3%. This tax change returns the rate to its previous level before an increase enacted by P.L.2009, c.75. The focus of the bill is to ease the financial burden on policyholders by reducing the overall cost associated with surplus lines insurance, which is often used when standard insurance coverage is not available. This bill tackles the pertinent issue of insurance costs in New Jersey, particularly for those opting for specialty or surplus line policies.
Contention
The proposed legislation may face scrutiny regarding its impact on state revenue and the funding mechanisms for essential services such as fire response. Critics of tax cuts in general often argue that reduced tax revenues can undermine public programs and community safety resources. By eliminating the previously imposed additional 2% tax on surplus lines policies, concerns might arise about the adequacy of funding for the firemen's relief associations and whether this action could affect local fire departments financially.
Relating to distribution of certain taxes and surcharges to benefit volunteer and part-volunteer fire departments and emergency medical services providers.