ICA maintains pressure on stamp duty
The Insurance Council of Australia (ICA) used last week’s federal and state leaders’ meeting on tax to lobby for the abolition of stamp duties on insurance policies.
It wrote to all premiers and chief ministers, urging them to commit to ending insurance taxes.
CEO Rob Whelan says although there has been progress, momentum for reform has stalled.
The ACT will remove stamp duty on insurance over five years, and while the Victorian Government has dropped the fire services levy, it has not changed its insurance stamp duties. Queensland and Tasmania have increased their duties in the past three years.
ICA asked NSW Premier Mike Baird to remove the state’s emergency services levy (ESL), which adds about 20% to the cost of home and motor insurance.
Two years ago NSW started work to remove its ESL but deferred its plans while it assessed reform under way in Victoria. The project has since stalled.
Mr Whelan says low-income households and property owners in high-risk areas carry a disproportionate burden from taxes on insurance, which are usually calculated as a percentage of premium.
“Insurance Council research reveals the tax payable in cyclone and flood-prone areas is on average twice that of residents in less disaster-prone areas, which has the flow-on effect of making high premiums more expensive than need be.”
If taxes are removed, more people will buy cover and underinsurance will be reduced, Mr Whelan says.