NSW regulator wants fire services levy scrapped, stamp duty cut
The fire services levy in NSW is closer to being extinguished after the state’s economic regulator released a damning final report on state taxation last week.
The NSW Independent Pricing and Regulatory Tribunal (IPART) released the report to the NSW Treasurer on Friday. It advocates significant cuts to insurance stamp duty and the abolition of the fire services levy.
The report comes down hard on “inefficient” insurance taxes, maintaining the line it took with an earlier draft in June.
“The fire services contribution by insurers is effectively a levy on insurance and creates disincentives for taking out appropriate insurance,” the tribunal said. “On this basis, its removal should be a priority.”
The report recommends the fire services should be funded through a transparent property-based levy administered by local councils. It recommends this levy should be distinct from property rates.
Karl Sullivan, GM for Policy in the Insurance Council of Australia’s (ICA) Risk and Disaster Directorate, says such a move “will lead to a more equitable and effective funding of fire services in NSW”.
The regulator is also scathing about stamp duty.
“Insurance duty is a highly inefficient tax that creates disincentives for appropriate insurance,” it said. “This suggests that the state should seek to reduce its reliance on this duty over the longer term.”
IPART found significant concessions and exemptions currently apply to certain insurance products in NSW, adding a disproportionate tax burden to other products. It recommends the tax base be widened and the standard rate of stamp duty be cut from 9% to 5%.
The tribunal was charged by the NSW Government with making recommendations to deliver a simpler, more efficient and competitive tax system.
Its findings are a strong signal that the fire services levy could finally be axed in NSW. Should that occur, only Victoria and Tasmania will remain as states that continue to impose the charge on insurance buyers.
Mr Sullivan says the report represents a “significant breakthrough in relieving insurance policyholders from the burden of insurance taxation”.
“We are continuing to pursue the challenge of insurance tax reform, not only in NSW but across Australia,” he said.
The NSW Independent Pricing and Regulatory Tribunal (IPART) released the report to the NSW Treasurer on Friday. It advocates significant cuts to insurance stamp duty and the abolition of the fire services levy.
The report comes down hard on “inefficient” insurance taxes, maintaining the line it took with an earlier draft in June.
“The fire services contribution by insurers is effectively a levy on insurance and creates disincentives for taking out appropriate insurance,” the tribunal said. “On this basis, its removal should be a priority.”
The report recommends the fire services should be funded through a transparent property-based levy administered by local councils. It recommends this levy should be distinct from property rates.
Karl Sullivan, GM for Policy in the Insurance Council of Australia’s (ICA) Risk and Disaster Directorate, says such a move “will lead to a more equitable and effective funding of fire services in NSW”.
The regulator is also scathing about stamp duty.
“Insurance duty is a highly inefficient tax that creates disincentives for appropriate insurance,” it said. “This suggests that the state should seek to reduce its reliance on this duty over the longer term.”
IPART found significant concessions and exemptions currently apply to certain insurance products in NSW, adding a disproportionate tax burden to other products. It recommends the tax base be widened and the standard rate of stamp duty be cut from 9% to 5%.
The tribunal was charged by the NSW Government with making recommendations to deliver a simpler, more efficient and competitive tax system.
Its findings are a strong signal that the fire services levy could finally be axed in NSW. Should that occur, only Victoria and Tasmania will remain as states that continue to impose the charge on insurance buyers.
Mr Sullivan says the report represents a “significant breakthrough in relieving insurance policyholders from the burden of insurance taxation”.
“We are continuing to pursue the challenge of insurance tax reform, not only in NSW but across Australia,” he said.