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Silence on insurance tax reform upsets ICA, NIBA

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Treasurer Joe Hockey’s tax reform workshop with state and territory counterparts last week should have been an ideal opportunity to make progress on the issue of inefficient insurance taxes.

But Mr Hockey’s summary following Friday’s meeting made no mention of the taxes that so many reviews have recommended scrapping.

The Insurance Council of Australia (ICA) says it is disappointed the crucial issue was not on the agenda.

“ICA will continue its campaign to have these unfair, inefficient and regressive taxes removed,” GM Communications and Media Relations Campbell Fuller told insuranceNEWS.com.au.

“Various government and independent reports, including the Productivity Commission, have recommended state taxes be axed.

“Abolishing state taxes would have the immediate effect of improving affordability of general insurance products for the Australian community, with the greatest benefit flowing through to householders with the greatest exposure to natural disasters.

“It would also significantly reduce underinsurance and non-insurance.”

The National Insurance Brokers Association (NIBA) told insuranceNEWS.com.au the issue must be tackled.

“NIBA’s position for many years has been that taxes on insurance are inequitable and act as a disincentive for consumers and business-owners to adequately protect their assets, contributing to the high levels of underinsurance in evidence across Australia,” Professional Development Executive Linda Evans said.

“While we realise that tax income is significant for the states and territories and must be replaced, we believe that federal, state and territory governments should take every opportunity to conduct meaningful dialogue about alternative sources of revenue that don’t act as a disincentive to purchase insurance.”