Insurers want NSW to drop insurance protection tax
The Insurance Council wants the NSW Government to immediately abolish the insurance protection tax used to levy insurers after the collapse of HIH Insurance.
Following the introduction into law last week of the Federal Government’s policyholder protection scheme, the insurers believe the need for the NSW levy is diminished.
ICA’s GM Economic and Taxation Directorate, Alex Sanchez, told insuranceNEWS.com.au the council raised the issue with the NSW Government as part of the IPART review, but the issue wasn’t mentioned in the report it released last week.
Mr Sanchez says the HIH-linked tax is “reaching its use-by date and is a bit of an anomaly”. It is due to be wound up at the end of the year.
The NSW Government introduced the tax following the collapse of HIH in 2001 and the subsequent royal commission. It is designed to protect policyholders from insurer collapse and to fund state government debt arising from the HIH collapse.
Unlike other state taxes, the tax on insurers is not able to be passed on to policyholders and is a direct tax on insurers’ capital. It is estimated to raise $69 million in 2008/09.
Mr Sanchez declined to comment on what may happen to any outstanding fund balance when the scheme is wound up at the end of the year.
Federal Assistant Treasurer Chris Bowen said in June that there are less than 280 outstanding HIH claims remaining, most of which will be settled by the end of the year.
Following the introduction into law last week of the Federal Government’s policyholder protection scheme, the insurers believe the need for the NSW levy is diminished.
ICA’s GM Economic and Taxation Directorate, Alex Sanchez, told insuranceNEWS.com.au the council raised the issue with the NSW Government as part of the IPART review, but the issue wasn’t mentioned in the report it released last week.
Mr Sanchez says the HIH-linked tax is “reaching its use-by date and is a bit of an anomaly”. It is due to be wound up at the end of the year.
The NSW Government introduced the tax following the collapse of HIH in 2001 and the subsequent royal commission. It is designed to protect policyholders from insurer collapse and to fund state government debt arising from the HIH collapse.
Unlike other state taxes, the tax on insurers is not able to be passed on to policyholders and is a direct tax on insurers’ capital. It is estimated to raise $69 million in 2008/09.
Mr Sanchez declined to comment on what may happen to any outstanding fund balance when the scheme is wound up at the end of the year.
Federal Assistant Treasurer Chris Bowen said in June that there are less than 280 outstanding HIH claims remaining, most of which will be settled by the end of the year.