The insurance industry would cautiously welcome the day that Federal Treasurer Peter Costello’s impossible dream of a unified taxation system for Australia came true. After all, it’s the level of state-based taxes and the wildly divergent statutory insurance regulations the states and territories indulge in that make insurance expensive to transact.

The Insurance Council of Australia (ICA) has cautiously welcomed Mr Costello’s latest push for Commonwealth control over what are now state taxation powers.

The Prime Minister-in-waiting was front page news yesterday after declaring his desire to see the Federal Government in full control of the national economy.

That would require state and territory governments to relinquish responsibility for taxation, ports and key utility markets. Stamp duty and other taxes on insurance would become a Commonwealth domain.

ICA Deputy CEO Dallas Booth says the Treasurer’s call is “interesting”. The industry has been working with the states to reduce taxation on insurance. ICA is seeking the gradual abolition of stamp duties as GST revenue increases, and the National Insurance Brokers Association recently launched a major campaign to educate brokers’ clients on the levels of tax they are paying.

Mr Booth says the Federal Government subsidised GST revenue for the states to make up for other taxes abolished when it was introduced in 2000. But GST is now revenue-positive and ICA will increase the pressure for tax relief on insurance.

Not surprisingly, most state premiers and treasurers have condemned Mr Costello’s suggestion. Victorian Treasurer John Brumby says his federal counterpart “should rethink his position”.