The Ontario government is proposing a new tax to help offset the costs of the provincial auto insurance market.
The Ontario Automobile Association says it expects the proposed tax will help lower auto insurance rates for the typical Ontario resident.
It’s estimated the proposed new taxes would reduce auto insurance costs by about $5 billion over the next five years.
However, critics have criticized the proposed changes, saying they would not go far enough.
They say the province’s plan will not address the problem of rising auto insurance premiums and will instead lead to a further spike in insurance premiums.
In addition to the provincial tax, Ontario also announced that it would introduce a 10-cent auto insurance surcharge on drivers who purchase a car insurance policy in the province.
The province said that surcharge will be $1 on the initial $500 purchase of a new vehicle, $1 for each subsequent $500 in annual costs, and $1 if the policyholder has not paid a $250 deductible in the past year.
Ontario’s new auto insurance tax will take effect on July 1, 2018.