NIBA’s campaign against unfair taxes
Marsh News, June 2009
The National Insurance Brokers Association (NIBA) recently produced a discussion paper to inform insurance buyers about state insurance taxes, including fire service levies and stamp duties, as part of an industry campaign against what it believes are unfair insurance taxes.
The paper, What you need to know about taxes on insurance, discusses the effects of the insurance taxes, including the disincentive for individuals to adequately insure, how the insurance tax is applied, and the alternatives for fairer funding.
According to the paper, Victoria and NSW have the highest insurance taxes in the world and impose a far higher tax than all other developed countries. It argues that the taxes are an unfair burden on policyholders and, in the case of fire service levies, penalizes insurance purchasers by effectively forcing them to subsidise the cost of their region’s fire services through insurance contributions, while those opting not to insure still benefit from the services provided.
The findings of two major tax reviews, along with the HIH Royal Commission, are also discussed, in particular the finding that “underinsurance and non-insurance were greatly exacerbated by insurance taxes.”
Recommendations by the State Business Review (Vic) and the HIH Royal Commission proposed that state and territory governments abolish stamp duty on insurance products, while the NSW Independent Pricing and Regulatory Tribunal (IPART) review called for a significant rate reduction in stamp duty for general insurance.
An electronic version of the paper is available from NIBA’s website at www.niba.com.au.