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$8.6b burden: NSW insurance taxes keep growing

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The NSW Government will reap $8.6 billion from insurance taxes and levies over the next four years, the latest state budget shows.

The Insurance Council of Australia (ICA) says revenue from insurance stamp duties and the emergency services levy (ESL) will increase 5.4% per year over the next four years, compared with annual inflation of 1.3%.

ICA has previously highlighted that, after ESL increases on July 1, NSW households will typically pay more than 50% in taxes on insurance, and small businesses could be paying up to 70%.

“Stamp duties and the ESL are a significant cause of non-insurance and underinsurance in the community,” CEO Rob Whelan said.

“ICA and its members would welcome consultation on an all-of-government approach to removing unfair taxes and levies on insurance and ensuring fairer taxation models are designed and implemented.”

The ESL was to be abolished and replaced by a broad-based property tax before a government U-turn in 2017, which cost the insurance industry $40 million.

The National Insurance Brokers Association (NIBA) says for the 2019/20 financial year, the ESL alone will raise $895 million, a 14% increase from the previous year.

NIBA says budget papers indicate a further 22% increase in the ESL for 2020/21.

CEO Dallas Booth says the increases are “a massive burden being carried by responsible property owners who take out insurance to cover themselves if a major loss occurs”.

“It is totally unfair and inequitable that the emergency services are funded by insurance policyholders, and not by property owners more broadly,” he said.

NIBA is seeking a meeting with the NSW Treasurer to discuss its concerns.