NIBA has welcomed the SA Government’s initiative to review insurance taxes.
NIBA CEO Dallas Booth says, that as the State Tax Review Discussion Paper pointed out and many previous reviews around Australia had shown, taxes on insurance are among the most inefficient taxes levied by governments and discourage people from fully insuring their property and businesses.
“Insurance taxes directly affect the affordability of insurance. As such, they contribute directly to under‐insurance and non‐insurance across the community,” he says.
“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.”
South Australia’s 11% stamp duty on general insurance policies is levied after the 10% goods and services tax, creating a tax-on-tax effect which multiplies the impact.
“Economic research has shown that replacing taxes like stamp duty with new or increased broader based taxes will provide a significant boost to GDP,” Booth says.
“The ACT Government has already gone down the reform path, gradually reducing stamp duty and committing to abolish it from July 1, 2016.
“We congratulate Premier Weatherill on his willingness to consider radical changes to the State’s tax system.”