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Victorians face extra $45m fire services tax, 4 May 2009

Victoria’s Budget will be handed down tomorrow – and it may have an unpleasant surprise in it for the state’s insurance-buyers.

Leaked reports at the weekend indicate the state government will allocate $61 million in additional funding to provide more equipment to the Country Fire Authority (CFA), although there are no details yet on how much of that amount will be sought through the fire services levy on insurance-buyers.

The reports say Treasurer John Lenders has allocated $20 million to upgrade the CFA’s communications, and $41 million for new fire trucks and other vehicles. Another $52 million will be spent on a five-year “fuel reduction” program, and $110 to upgrade the emergency telephone system.

Insurance regulation consultant John Hanks told the industry provides 75% of the financing for Victoria’s fire services. “There’s a high risk the industry will have to pay about $45 million of that amount,” he said.

“We won’t know until tomorrow when the state budget is announced, but unless there’s a change in the collection system there’s a very high risk the fire services levy will be used.”

Mr Hanks says any increase in the levy would also impact on the level of tax collected through the “cascading” levels of GST and stamp duty.

“Victorians already pay world record levels of tax on their premiums, so hopefully they’re planning to raise the money some other way,” he said.