Association Warns Insurers that Bill Would Impose Hidden Tax to Fund California Campaigns

March 31, 2006

The Association of California Insurance Companies is warning insurers that the California Legislature will soon consider a bill that would establish the dangerous precedent of imposing a hidden, multi-million dollar tax on Californians to publicly fund campaigns of candidates they may or may not support.

Jeff Fuller, ACIC’s executive vice president and general counsel, said the legislation, SB 1459 by Sen. Joe Simitian (D-Palo Alto), raises a number of constitutional issues about freedom of choice and limiting the amount of money available to candidates through the hidden tax.

“This bill sets a dangerous precedent by allowing publicly funded campaigns in California. It completely ignores public sentiment against such activities as well as constitutional safeguards,” Fuller said.

SB 1459 is scheduled to receive its first legislative test April 5 before the Senate Banking, Finance and Insurance Committee. According to ACIC, the bill would impose a fee on insurance companies equal to 0.01 percent of the $2.3 billion in gross premium taxes they pay to the state each year. The fees would be used to fund campaigns for insurance commissioner.

“This fee is a tax in disguise. And, as we all know, fees and taxes are passed down to consumers as part of the prices they pay for products. This fee, therefore, would be paid by millions of Californians who have one or more forms of insurance coverage, including auto, homeowners, life and health,” Fuller said. “Legally, the bill may well violate the insurers’ — as well as the consumers’ — freedom of choice rights since the fee revenue would be used to support the campaigns of candidates they may or may not support for election.”

Source: ACIC

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