Victoria has become the first state to abolish stamp duty on life insurance contracts.

The change was announced in the state budget last week and takes effect on July 1. It is expected to save consumers $16 million over four years.

Financial Services Council CEO John Brogden has welcomed the move and called on other states and territories to follow suit – and he warns it will be a nightmare if they do not.

“Different obligations imposed by stamp duty legislation in each state have created a massive administrative burden on the life insurance industry, which operates at a national level,” he said.

Mr Brogden says the move is a step towards eliminating inefficient taxes and red tape.

“Victoria now leads the country in tax reform. Abolishing stamp duty on life insurance… will mean one dollar in the pocket for every Victorian.”