Axe insurance taxes, says NSW regulator
There’s a strong case for NSW to abolish the fire services levy (FSL), the state’s economic regulator revealed in a report last week.
The NSW Independent Pricing and Regulatory Tribunal (IPART) has released a draft report into its review of state taxation.
It identifies insurance tax in general, and the FSL in particular, as the “least efficient state taxes”.
“These revenue sources penalise those who are prudent enough to take out insurance,” the report states, identifying “a strong case for abolishing them entirely”.
National Insurance Brokers Association (NIBA) CEO Noel Pettersen says the report is encouraging. “It is consistent with suggestions put forward by NIBA,” he told insuranceNEWS.com.au. “The detail is yet to be worked through but it is good this issue is being recognised at both the state and federal level.”
IPART says the FSL allows “non-contributors to benefit from the provision of fire services without contributing to the cost through insurance policies”.
Instead, it recommends insurer contributions to the fire services be replaced by an equivalent increase in contributions by local councils through property rates.
The regulator also moots reducing stamp duty for general insurance from 9% to 6%.
But Mr Pettersen is concerned at the proposal to levy stamp duty on compulsory third party motor insurance, saying this could simply shift the tax burden on insurers rather than remove it.
Insurance Council of Australia CEO Kerrie Kelly welcomed the interim report as “a significant reform that will lead to more effective and equitable funding of fire services in NSW”.
“If adopted in their entirety by the NSW Government [the recommendations] will provide major benefits to consumers,” she added.
Submissions to the report close on July 11.
The NSW Independent Pricing and Regulatory Tribunal (IPART) has released a draft report into its review of state taxation.
It identifies insurance tax in general, and the FSL in particular, as the “least efficient state taxes”.
“These revenue sources penalise those who are prudent enough to take out insurance,” the report states, identifying “a strong case for abolishing them entirely”.
National Insurance Brokers Association (NIBA) CEO Noel Pettersen says the report is encouraging. “It is consistent with suggestions put forward by NIBA,” he told insuranceNEWS.com.au. “The detail is yet to be worked through but it is good this issue is being recognised at both the state and federal level.”
IPART says the FSL allows “non-contributors to benefit from the provision of fire services without contributing to the cost through insurance policies”.
Instead, it recommends insurer contributions to the fire services be replaced by an equivalent increase in contributions by local councils through property rates.
The regulator also moots reducing stamp duty for general insurance from 9% to 6%.
But Mr Pettersen is concerned at the proposal to levy stamp duty on compulsory third party motor insurance, saying this could simply shift the tax burden on insurers rather than remove it.
Insurance Council of Australia CEO Kerrie Kelly welcomed the interim report as “a significant reform that will lead to more effective and equitable funding of fire services in NSW”.
“If adopted in their entirety by the NSW Government [the recommendations] will provide major benefits to consumers,” she added.
Submissions to the report close on July 11.