ABS Statistics – Highlight Taxation Burden on Insurance Products
Insurance Council of Australia, 3 April 2007
Statistics released today from the Australian Bureau of Statistics, support insurance industry data highlighting that General Insurance taxes are an unfair encumbrance to insurance policyholders – a burden not equally distributed in the community.
The figures show that State taxes on insurance now amount to $3.56 billion or 8% of all State taxes.
“The need for reform of these taxes is increasingly apparent in NSW and Victoria where this percentage increases to nearly one in every ten dollars in taxes is raised from insurance.” Paul Giles, Insurance Council, General Manager Communication said.
“The removal of taxes on insurance was also a key recommendation from the HIH Royal Commission.”
“The general insurance sector is heavily taxed despite the important role insurance plays in the economic well being of the nation and in assisting the community and individuals in protecting their assets. Over the past five years state taxes on insurance have increased from $2.4 billion to $3.56 billion – an increase of just under 50%.”
Australia, especially in NSW and Victoria, have an extremely high level of taxation on insurance. In international comparisons Australia performs poorly in regards to the burden placed on insurance products.
“High levels of taxation on insurance products have a significant effect on a consumers’ choice to purchase general insurance products in Australia. Insurance Council research shows that over 1.8 million households, or 23% of all Australian households, do not have any form of home or contents insurance.” Mr Giles said.
The Insurance Council is examining the issue of non-insurance by undertaking key research to identify the who, why and trends associated with non-insurance.
The Insurance Council wants to engage in all levels of government to work towards the removal, or at the very least, the reduction of, State taxes and levies on insurance products.”
“The Insurance Council believes that tax reforms on insurance products will assist in addressing the issue of under and non-insurance, whilst also easing pressure on Government funded appeals during natural disasters.” Mr Giles said.