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NSW Budget: Policyholders taxed more than gamblers

The NSW Budget papers show that people who are prudent enough to protect their property with insurance continue to be taxed more heavily than gamblers, the National Insurance Brokers Association (NIBA) said today.

NIBA CEO, Noel Pettersen, said that while taxes on insurance would deliver $1.912 billion into State coffers in 2010-11, the so-called “sin taxes” on gambling and betting would bring in $1.804 billion.

The $1.912 billion included the tax on insurers to fund 73.7% of the budgets for the fire services and the State Emergency Service, which is passed on to policyholders through a fire and emergency services levy, as well as Stamp Duty. When GST is included, the “tax on tax” effect of the levy + GST + Stamp Duty, means a $500 premium costs $822.80.

Recommendation 79 of the Henry Tax Review says: “All specific taxes on insurance products, including the fire services levy, should be abolished.

Insurance products should be treated like most other services consumed within Australia and be subject to only one broad-based tax on consumption.”

Mr Pettersen said that the recommendation was just the latest in a long line of findings, including by the HIH Royal Commission and the NSW Independent Pricing & Regulatory Tribunal, that the levy and State Stamp Duty unfairly penalise policyholders. For example, those who do not pay for insurance do not contribute, yet the fire brigade still attends a fire on their property.

“The Budget papers say that the Government expects the Henry Review’s recommendations will be the subject of ‘on-going discussions’ between governments. But there should be no need for further debate about replacing the levy with a fairer tax because the evidence is overwhelming.

“NSW should join Queensland, South Australia and Western Australia in introducing a broad-based property tax,” Mr Pettersen said.

^ENDS

^{For further information contact Noel Pettersen on 02 9459 4300 or go to www.niba.com.au/tax NIBA is an independent industry association representing 500 firms and more than 2600 intermediaries, who handle almost 90% of the commercial insurance transacted in Australia. Brokers play a major role in insurance distribution, handling $10 billion in premiums annually and placing around half of Australia’s total insurance business.}