Insurance tax 'unfair to the poor'

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The Independent Online
(First Edition)

THE 3 per cent insurance tax to be introduced in October will cost poor families up to seven times more than those in affluent areas, according to a study by Harriet Harman, Shadow Chief Secretary to the Treasury, writes Patricia Wynn Davies.

In his Budget speech, Kenneth Clarke, the Chancellor, said a 'typical' family with motor, home contents and buildings insurance would pay 35 pence extra a week.

However, according to Ms Harman's survey of constituencies with the highest and lowest insurance rates, people living in high unemployment areas will be hit far more heavily because premiums are already higher.

Ms Harman said a family in a three-bedroom home in Liverpool Riverside (unemployment rate 24.8 per cent) faces a bill of up to pounds 540 for pounds 30,000 of contents insurance, while one in Westmoreland & Lonsdale, Cumbria (unemployment rate 4.6 per cent) pays as little as pounds 77 for the same coverage. The Liverpool family would pay an extra pounds 16.20 in the new tax, while the Westmoreland family would pay pounds 2.30.

Ms Harman said: 'The new insurance tax not only hits the victims of crime, but also hits hardest at those who can least afford it. Those living in high unemployment areas, who are already suffering most from Tory economic failure, must now pay the price of Conservative failure a second time.'

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