Paying through the home
NIBA Backgrounder, April 2006
It’s not just businesses getting caught up in the insurance tax rip-offs of Australian states. Personal lines are also subject to the combined effects of fire services levies (FSL), stamp duties and the goods and services tax (GST). Depending on the jurisdiction this can add up to 44% to the cost of a standard home and contents premium.
Victorian country residents are the hardest hit. Their FSL adds 19% to personal insurance rates, to which GST (10%) and stamp duty (10%) are also applied. Those in Melbourne are the second worse-off, with a 15% FSL. New South Wales residents also incur a 15% FSL but have a slightly lower stamp duty (9%) to contend with. Their total tax liability on home insurance amounts to 38% of the premium.
The other states have either removed or never adapted an FSL on home insurance.
And it certainly shows on household budgets. Compare the extra 39% urban Victorians pay in personal insurance taxes with the total 18.25% paid throughout Queensland. If you have a median-value home with average contents in metropolitan Melbourne, you can say goodbye to an extra $195 on a $500 home and contents premium.
Insurance has long been a vehicle for state government taxes, but several state governments have begun reducing the impact on policyholders. If yours hasn’t, it might be time to ask why.