Evening star., 1937-04-25

OpSTdJlIlk III JllS blStElCU WUulu
be increased roughly 33 per
Il cent by passage of H. r. 6032,
one of the series of revenue measures
offered by Representative Collins of
Mississippi, which has been referred
to the House District Committee.
The bill has three major purposes.
First, it would increase the present
rate of tax on net premium receipts
and on policy fees from is to 2 per
cent. Also it would increase the
nominal franchise and license fees
charged by the District.
Second, it would broaden the field
of the insurance business subject to
the tax by bringing into the picture
the fraternal insurance companies and
the mutual fire insurance companies,
which heretofore have been exempt
from the tax.
Third, it would repeal the present
complicated series of levies which are
applied to the marine insurance busi-
ness transacted in the District and
substitute for present formulas the
same simple rate on net premium
receipts which would be applicable to
all other types of business.
If adopted, the bill would affect all
types of insurance business, including
domestic and foreign, fraternal, stock
and mutual, the reciprocals, Lloyds,
insuring against loss of life or health,
or by fire, marine, accident. casualty,
fidelity and surety, title guarantee or
other hazard not contrary to public
policy.
The yield is calculated to be roughly
100000 above the revenues taken
from the present system of levies.
Some think the additional revenue
may go slightly above this figure.
There are now 1872 insurance COM
panies engaging in business here
which now are subject to the present
tax levy of is per cent on net
premiums. The effect of the bill
would be to add to this list a total Of
ITO companies now exempt. These
would be 40 foreign and domestic
mutual fire companies and SO foreign
and domestic fraternal insurance
companies.
Premiums collected by the IS fra
ternal companies in the calendar year
1884 (the latest for which the Dis
trict Insurance Department has pub
lished official figures) was $543,802.
It may be assumed the total OF
premium receipts of these companies
has gone up since that year. But,
for the purposes of conservative esti-
mates, tax levy of per cent on the
net premiums at $543,802 would pro-
duce additional revenues of $l0,860.
The As mutual fire insurance COM
panies, which are not subject to the
tax imposed on other insurance COM
panies, took in s254,491 in net
premiums in the calendar year 1896
on risks written in the District, ac-
cording to current calculation. The
proposed 2 per cent tax on net
premiums would bring to the District
additional revenues Of 5000.
There would be a much larger boost
in revenues from the proposed increase
in the rate from Is to per cent in
its application to other concerns, now
subject to this tax. The yield for
the calendar year 1885 and paid
March l, 1886, amounted to $475,-
336.35 To increase the rate by one
third is expected to boost the revenues
by $158,445, and with the application
of the tax to the futual fire and the
fraternal companies, plus the pro-
posed higher franchise fees, the grand
total would go to about $675, 1886.
The present system of taxes on the
marine insurance business written in
the District is described by insurance
experts as riddle" One official
said the triple system is as much of
a headache to the insurance COM
panies as to the District officials, in
making the annual calculations.
The mere description of the series
Of taxes and the formulas against
which they must be applied requires
statement of no less than l,700
words. This outline Is contained in
Sections to l3, inclusive, in the
marine insurance act, approved March
4, 1922.
This present tax system may be
described broadly as follows: First,
there is per cent tax on the un-
derwriting profit made by marine
insurance companies on risks writ
ten in the District, this to be ap-
piled to the average profits over
the preceding five years. Second,
there is per cent tax on the aver
age earnings on reserves for unpaid
losses and unexpired premiums and
for the p .rposes of this tax such aver
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