In April NIBA unveiled its campaign to lobby state and territory governments to abolish insurance taxes. NIBA enlisted its members to show their clients the scale of taxes they are paying on premiums, and provide information for them to contact their local MPs on the issue. “Every time premiums rise, the tax take also rises,” CEO Noel Pettersen said. “The states and territories are making hundreds of millions of dollars in windfall gains, and they should be addressing the impact this is having on all businesses, large and small.”

It didn’t take long to gain a groundswell of support. Brokers around the country responded swiftly to the call to get clients involved. As for the mainstream media, the response to NIBA’s campaign was also positive. Major newspapers carried mentions of the strategy, radio interviews were conducted and leading Sydney radio commentator Alan Jones gave it his tick of approval.

In May the first breakthrough came when Tasmania abolished stamp duty on public liability insurance premiums. Queensland and SA followed with similar cuts, and then in August NSW halved its stamp duty  on all policies from 10% to 5%. WA will remove the fire services levy from July next year.

Meanwhile the Victorian Government wouldn’t budge, reaffirming its opposition to abolishing any taxes. In response to letters from MPs demanding action on the issue, Treasurer John Brumby said stamp duty levied on premiums on top of all other charges is “a vital source of revenue for the Government”.  The Victorian insurance tax debate has gone further. In August the state’s Supreme Court ruled in favour of a claim by Royal & SunAlliance that the gross insurance premium does not include the GST. Being on the losing end, the Bracks Government now intends to change legislation to make sure that the entire premium – including GST – remains subject to stamp duty.

“The Government will act to ensure that the collection of this revenue – which funds many vital services – is fully protected,” Mr Brumby said, neglecting to mention the millions of dollars in windfall profits raised as a result of rapidly escalating insurance premiums. The legislation was put on hold because of the Victorian State Election.

Meanwhile, a coalition of the insurance industry and other major state industries has forced a review of the state’s fire services levy system. The review will be completed in 2003.