Reform should stop states' $3.7 billion 'tax on tax'
National Insurance Brokers Association Chief Executive Noel Pettersen has called on the Federal Government to include taxes on insurance premiums in its mooted “root and branch” review of the taxation system, saying the time has come for the states to loosen their tax stranglehold on insurance premiums.
“This is an opportunity to remove the enormous level of cascading taxes on premiums that have made Australian insurance policyholders the highest taxed in the world,” he said.
In 2006/07 state governments raised $3.714 billion from taxes on insurance premiums, which includes $854 million in fire services levies.
NIBA says the high level of stamp duties charged after GST on insurance products is a “tax on a tax” and adds to the cost of doing business.
“The Federal Government applies GST to insurance premiums – the revenue from which is returned to state and territory governments – and then the states apply stamp duty on top,” Mr Pettersen said.
“These taxes on top of taxes deter people from taking out appropriate levels of insurance and fly in the face of fundamental principles of good taxation.”
Several tax reviews and the HIH Royal Commission have called for state and territory governments to drop insurance taxes.
ENDS
For further information contact Noel Pettersen on 02 9459 4300 or visit 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.