The Federal Government should take the lead on removing the burden of insurance taxes on the community, the NIBA says in its pre-Budget submission.
"With overwhelming evidence in support of the need to reform and remove inefficient insurance taxes, and with credible options having been identified for alternative revenue streams, NIBA strongly submits that it is now appropriate for the Federal Government, through the Federal Budget process, the Council of Australian Government and other inter-governmental arrangements, to lead the process of reform and change," the submission says.
In the latest move in the long campaign by the insurance industry to reform taxes, NIBA CEO, Dallas Booth, welcomes the decision by the Victorian Government to phase out fire services levies on insurance premiums which, along with stamp duty and the GST, add as much as 150% to the cost of a policy.
However he points out in the submission that NSW policyholders still pay insurance taxes of up to 60% through the combination of stamp duty, GST and the fire services levy, with no indication that the State Government has any desire to introduce reforms. Policyholders in other States and territories still pay GST and stamp duty, increasing the cost of insurance by around 20%.
"On behalf of the millions of Australians and Australian businesses who purchase insurance each year, NIBA strongly urges the Federal Government to lead the process for the reform of insurance taxes in Australia. "Insurance taxes directly affect the affordability of insurance in Australia. As such, they contribute directly to the under-insurance and non-insurance concerns across the community.
"This is directly contrary to good social policy. Insurance is the main source of funds for restoration and recovery from natural and other disasters, and lack of comprehensive insurance cover results in real ongoing detriment to individuals, families and communities across Australia," Booth said.
A number of inquiries and reviews, including the Henry Report on Australia's Future Tax System (December 2009) had consistently noted the inefficient nature of insurance taxes, and the need for reform.
NIBA acknowledged that stamp duties on insurance premiums raised significant revenue for the States and Territories, and the removal of those taxes would most likely require replacement revenue streams, he said.
However, technical studies had identified possible alternative sources of revenue such as the more economically efficient land and payroll taxes.
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