Insurance duties make up 8% of state and territory tax revenue, according to the tax white paper released today.

Australia is more reliant on vehicle and insurance duties than other countries, the discussion paper – issued by the Federal Government to encourage debate on tax reform – says.

“As with stamp duties more broadly, insurance taxes are among the most inefficient taxes in Australia.”

The paper says insurance taxes increase the cost of cover, place a large burden on home insurance and may lead to underinsurance or non-insurance among price-sensitive customers.

Rates of non-insurance are higher among groups such as retirees with mortgages and single parents, leaving them more financially vulnerable in the event of loss.