Assistant Treasurer Helen Coonan says a Commonwealth review of taxes affecting the affordability of household insurance is likely to be useless because of high state and territory taxes.

In a statement, Senator Coonan said she blames the governments of the states and territories for high taxation on insurance and the dwindling numbers of Australian households covering their houses and assets. Victoria and NSW, for example, have world record levels of premium taxes.

Insurance Council of Australia (ICA) figures show that insured householders are paying $80 million a year for the fire service levy, $62 million for GST and $67 million in stamp duty. In Victoria alone that means insured householders are paying a massive $209 million a year in added taxes.

Senator Coonan used the opportunity to take a swipe at the fire services levies of Victoria and NSW, which she said not only increase the cost of insurance, but penalise people who take responsibility for their assets by insuring them.

“The fire services levy would have to be the most inequitable of all taxes as the people who pay for insurance pay the levy; yet everyone in the community has access to the service,” she said. 

The premium taxes issue will be addressed when Senator Coonan meets state and territory finance ministers at a ministerial meeting in April.

But don’t expect much beyond rhetoric. Commenting on an ICA call for the Government to consider tax deductions for household insurance, she said she is “not convinced this… would result in significant improvements in the take-up of insurance in Australia”.

She said a 30% tax rebate would cost around $700 million each year, and tax deductions would cost around $1 billion.

And she says the concessions would advantage people that already have insurance, rather than encourage more people to insure. “Government intervention is unacceptable because it will favour higher income-earners, rather than poorer families who should be encouraged to take out insurance.”