Allianz welcomes Victorian Government decision to abandon increase in insurance taxes
Allianz Australia Media Release, 30 May 2007
“Allianz Australia welcomes the decision by the new Victorian Minister for Police and Emergency Services, the Hon Bob Campbell MLA, to not proceed with the introduction of a new High Total Insured Value class of business under its Fire Services Levy (FSL), which would have increased insurance taxes on large business”, said Nicholas Scofield, General Manager Corporate Affairs.
Victoria has the unenviable reputation of having the highest taxes on insurance in the world. Cumulative taxes on property insurance in Victoria can reach around 80%, largely as a result of the unfair and inefficient Fire Services Levy. The proposed new FSL class would have raised property insurance taxes for large business even further.
This proposal came out of the 2003 review of Victoria’s FSL. In an attempt to be seen to be doing something about FSL’s inherent inequity in the face of a pre-determined view that FSL would continue, government bureaucrats dreamed up a way to charge more tax on commercial property insurance policies with a deductible of more than $10,000.
“The proposal to charge FSL on the notional premium relating to deductibles over $10,000 was impractical and unworkable, and simply demonstrated a lack of understanding of insurance in general and the use of deductibles in particular,” Mr Scofield said.
“Allianz, other insurers and brokers argued this point strongly at the time and were vindicated when the actuaries commissioned by the Government dumped the high deductible proposal because it was unworkable. In its place the Government’s consultant actuaries came up with the idea of imposing a higher FSL contribution on policies with a High Total Insured Value instead, however, this only made a terrible piece of tax policy into a bad one”, according to Mr Scofield.
“From a tax policy point of view, the Fire Services Levy is about as bad a tax you can get, the Victorian Government should be looking to get rid of FSL rather than make it worse. Allianz Australia therefore congratulates Minister Campbell on his decision to abandon the proposal to increase property insurance taxes on large business. While this is a good outcome for the insurers, the Insurance Council and National Insurance Brokers Association, who argued long and hard against this tax increase, it is a better outcome for Victoria’s business community and economy”, Mr Scofield said.