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Budget: insurers pin hopes on tax review

Insurers are hoping the Federal Government’s 18-month review into taxation at all levels could lead to a reduction in insurance taxes.

Treasurer Wayne Swan made the announcement in last week’s Federal Budget which otherwise contained little of note for the general insurance industry.

Stamp duty on insurance in 2006/07 was worth a collective $2.86 billion to state governments, according to the Australian Bureau of Statistics. Fire services levies imposed by several states bring the total to more than $3.7 billion.

NIBA CEO Noel Pettersen says the review should encourage the states to loosen their tax stranglehold on insurance premiums.

“This is an opportunity to remove the enormous level of cascading taxes on premiums that have made Australian insurance policyholders the highest taxed in the world,” he said.

Zurich Head of Planning and Business Practice Adam Squire says the Government should take a lead from other jurisdictions.

“It is an incredibly large slice of revenue but we hope the Federal Government will take the lead and look at existing models around the world that are a more equitable source of funding,” Mr Squire said.

In a submission to the Federal Government in November, IAG stated a “clear social and economic case for eliminating or at least reducing state insurance taxes and charges as a priority for any reform of Australia’s tax system”.

Insurers and brokers argue taxes inflate insurance premiums and therefore discourage consumers from taking out necessary cover.