World record taxes hit regional Victoria businesses
NIBA Media Release, 8 December 2008
Businesses in regional Victoria are now paying virtually a dollar in government taxes and charges for every dollar spent on insurance, according to the National Insurance Brokers Association (NIBA).
Chief Executive Noel Pettersen has written to Victorian Treasurer John Lenders and Police and Emergency Services Minister Bob Cameron calling new rises in the controversial fire services levy and its “cascade” effect on other taxes “inequitable and badly in need of reform”.
He said insurance brokers have been informed that the rate of fire services levy for Victorian country commercial insurance is to rise to 63% of the basic premium.
“When GST and stamp duty are applied the total taxes and charges are a staggering 97.23% of the basic premium,” Mr Pettersen said. “Victoria takes more in taxes and charges on insurance premiums than anywhere else in the world.”
Commercial insurance-buyers pay the fire services levy as well as GST and stamp duty. These taxes are “cascading” – that is, each charge is totalled before the next level of tax is charged.
The latest calculation for commercial property policies in regional Victoria based on a $100 basic premium is as follows:
$100.00 Basic premium
63.00 63% fire services levy
163.00
16.30 10% GST
179.30
17.93 10% Victorian Stamp Duty
197.23
“No industry can afford such taxes and charges without significant consequences,” Mr Pettersen told the ministers. “They simply drive normally prudent people away from insurance protection.
“NIBA supports the work of the fire services and agrees that it is important that these services are well funded. However, we are strongly opposed to the weight of taxation currently placed upon Victorian insurance policyholders.
“It’s high time Victoria introduced a more equitable method of funding fire services.
“It is well recognised that insurance taxes, including the fire services levy, are an inequitable form of taxation as they perform very poorly against any analysis of sound taxation principles.”
Mr Pettersen said the base to which the fire services levy applies is very narrow.
“Those that do not insure their property make no contribution to providing fire services while still enjoying the relevant services,” he said. “Those people who underinsure do not make an adequate contribution for the services that they receive.”
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.