The ACT Government has made further strides in insurance tax reform, dropping general insurance duty from 8 per cent to 6 per cent.
The reduction is part of a five-year plan to completely phase out insurance taxes, which will make the ACT the first state or territory in the country to do so.
It is estimated that the amount of insurance duty saved by Canberrans, compared to before tax reform, is $24.7 million.
NIBA CEO Dallas Booth praised the move, saying numerous reviews supported the removal of taxes such as insurance stamp duty because of their inefficiency.
“Insurance taxes directly affect the affordability of insurance in Australia,” he says.
“As such, they contribute directly to the unacceptably high levels of under-insurance and non-insurance concerns in communities across Australia.
“ACT is showing leadership in this area. We hope other states and territories take note of this significant example of tax reform.”
Booth recommends that more be done by all states to encourage people to protect their property through insurance rather than relying on the public purse. “Economic research has shown that replacing taxes like stamp duty with new or increased broader based taxes will provide a significant boost to GDP,” he says.
Late last month the Queensland Government announced a hike to insurance tax, which was condemned by NIBA and the Federal Government.