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26 May 2013
The NSW Government has announced reform of its emergency services levy (ESL) system as it moves towards dropping taxes on insurance policies in favour of a property-based levy.
The Government has released a discussion paper and launched a website as part of a consultation process that will run until October 8, saying it is seeking feedback on a “better, fairer and more efficient way of funding emergency services in NSW”.
Treasurer Mike Baird, who announced the reform of emergency services funding moves in last month’s state budget, says NSW property-owners who insure are subsidising the 36% of households who do not – the highest rate of non-insurance in the country.
“The current system has serious weaknesses and is economically inefficient,” he said.
“Taxing insurance increases the price of insurance and can lead some people to underinsure and others not to insure at all.”
Insurance taxes provide 73.7% of the emergency services’ funding. Local governments pay 11.7% and the State Government 14.6%.
The discussion paper, Funding our Emergency Services, shows Fire and Rescue NSW’s estimated expenditure this financial year will be $647 million, the Rural Fire Service $303 million and the State Emergency Service $1.03 billion.
It shows that about 17% of homeowners do not have contents insurance, while 76% of renters do not have insurance.
The Insurance Council of Australia (ICA) estimates the average fire services levy charged by insurers costs homeowners $105, businesses $666 and rural consumers $218, before GST and stamp duty.
In a report on the impact of moving to a property-based charge, ICA says the inequity of the current system provides a disincentive for property owners to buy adequate insurance cover.
The Government website – haveyoursay.nsw.gov.au/ESL – asks 10 questions, including whether differential property rates should apply under ESL reform, how the revenue target should be set and whether local councils or the State Revenue Office should collect the tax.
Emergency Services Minister Michael Gallacher says the Government wants input on the potential design, scope, features and transition to a new form of collection.
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