Insurance taxes too high
Financial Standard, 16 March 2009
The average household in Victoria pays as much as 50 per cent more in house and contents cover due to government-related insurance taxes, prompting an insurance industry body to call for tax reforms ahead of the bushfire royal commission.
The National Insurance Brokers Association (NIBA) has called for a review of insurance premium taxes.
It is estimated that as many as one-third of the houses destroyed in the Victorian bushfires were not insured.
“Insurance must be affordable to be effective, yet state government taxes place a simple product like home and contents cover into the ‘too expensive’ basket for many people,” said Noel Pettersen, NIBA’s chief executive.
Pettersen said the Victorian and New South Wales governments collect 75 per cent of the budget for their fire services from insurance premiums.
“It’s a process designed to extract the maximum possible in taxes and adds a significant amount – up to 50 per cent in the case of regional Victorian householders – to the total bill,” said Pettersen.
The problem is that premiums are set to increase further from July this year after the NSW Government changes the State Emergency Service levy, which then increases the NSW stamp duty.
“Insurance isn’t a sin. They shouldn’t be able to tax insurance at the same rate they do alcohol, or tobacco or gambling.”