“A Nation Charred”, the House of Representatives Select Committees’ dramatically titled report into last summers’ devastating bushfires, has weighed into the debate over fire services levies (FSL). It has recommended all governments still using the FSL should now move to abolish it.

Offering 59 recommendations, the 465-page report led by Committee Chairman Gary Nairn, the Federal MP for Eden-Monaro, says states and territories that still adhere to the old FSL should look into alternative funding schemes.

“The issue of taxes on insurance premiums warrants review,” Mr Nairn said. “The taxing system on insurance acts as a deterrent to protecting assets because there is preferential treatment in the deployment of response services. Financial support is, to an extent, provided to the uninsured through various relief funds.”

This is the second inquiry in seven months to recommend the abolition of insurance taxes, with HIH Royal Commissioner Neville Owen finding in April that insurance policyholders are over-taxed.

The Insurance Council of Australia (ICA) has welcomed the recommendations, saying cutting the levy would significantly reduce insurance costs for policyholders.

Peter Jamvold, ICA’s Melbourne-based Group Manager, says Victoria has the highest insurance tax rates in the world, and such taxes penalise policyholders who have been prudent enough to insure. 

SA, WA and Queensland have already replaced their FSL schemes with property-based schemes, and ICA hopes NSW will follow suit when it completes its inquiry in the coming months. Earlier this year the Victorian Government rejected FSL reform.