Editorial | U.K. Proposal To End Satellite Insurance Tax is Right Thing To Do
The British government’s proposal to end an insurance tax currently levied on domestic satellite operators is concrete evidence that London is making good on promises to create a more business-friendly environment for the commercial space industry.
Currently, companies like Avanti Communications are required to pay a 6 percent tax on satellite and launch insurance premiums. That might not sound like a lot, but insurance typically is the third-largest expense, behind satellites and launch vehicles, that these operators incur.
So if, for example, a company takes out a $300 million insurance policy on an upcoming launch, the premium might be 6 percent, or $18 million. The tax on that comes out to about $1 million, which for a company the size of Avanti is a significant expense.
What’s more, comparable industries including commercial aviation and shipping are already exempted from the Insurance Premium Tax. Given that, it seems a bit unfair and arbitrary that satellite operators are not. The barriers to entry in the satellite business are high enough without the tax.
The British government has made abundantly clear its intentions to raise the nation’s profile in space, and has backed that up by dramatically increasing its investment with the European Space Agency and in other projects. By exempting satellite operators from the Insurance Premium Tax, which it absolutely should do, the government will have demonstrated its appreciation of the fact that private-sector investment also has a crucial role to play in achieving this goal.