Insurers and brokers in New Zealand are up in arms over a Government proposal to increase the base for collecting the fire service levy (FSL) and rescue services funding.

Under the proposal there will be a new national fire and rescue service, which will funded by a tax on insurance premiums.

Insurance Council of New Zealand (ICNZ) CEO Chris Ryan told Sunrise Exchange News the funding of such a service through a continuing tax on insured New Zealanders only is inefficient and unfair.

“We believe it is in the interests of all the insurance industry’s customers to have a better way of funding the fire service than a tax applied only to them.”

The Insurance Brokers Association of New Zealand (IBANZ) agrees. CEO Gary Young says policyholders are forced to pay even more when the national and local governments use taxpayer and ratepayer funds to assist the uninsured.

“It’s not a levy, it’s a tax,” Mr Young said. “It’s a tax on the very people who are trying to do the right thing by making sure they are adequately insured.”

Another problem with the proposal is that by imposing levies on top of premiums it encourages people to go without insurance or make do with inadequate cover.

Mr Ryan says general taxation would be a better way to fund the new service. “It’s the way that the police force is funded,” he said. “Or there could be a fire tax applied to all properties and vehicles, ensuring that all New Zealanders – not just those who bother to insure – pay the tax.”

He says it is not clear whether self-insured entities like government departments and agencies will also pay levies. At present most don’t pay the fire service levy.