A study has found fresh evidence that backs the case for scrapping insurance taxes.

The Victoria University research focused on four taxes’ changing impacts on the economy as their rates increased or decreased – unlike past studies that have compared outcomes at current levels.

Personal income tax, goods and services tax, stamp duties and insurance duties were examined, because they are frequently mentioned in tax reform conversations.

The study found stamp duties and insurance taxes remain “harmful” even at low rates, according to researchers Jason Nassios and James Giesecke.

“This strengthens the case for abolishing these taxes altogether, rather than merely scaling them back,” they say in an article published today in The Conversation.

Insurance duties raise revenue equivalent to about 0.3% of GDP and cause about 38.5c of economic loss per dollar.

When modelling reduced the revenue contribution to 0.01% of GDP, the cost only dropped to 31c.

In contrast, personal income tax and GST still outperformed stamp duties and insurance taxes when their share of GDP went up.

The researchers say the “economic case is clear: some taxes, especially stamp duty and insurance duty, are inefficient at any level. These taxes have narrow bases and distort behaviour … Insurance duties discourage insurance uptake, making these taxes poor tools for raising even modest revenue.

“Narrow-based taxes like these should be removed entirely from Australia’s system.” 

The findings come before the federal government’s economic roundtable in Canberra from August 19-21, when budget sustainability and tax reform are on the agenda.