Applying insurance stamp duty on a GST-exclusive basis for insurance premiums would not involve any substantial change to administration costs, according to a Western Australian Government interim report.

The State Tax Review Interim Report, co-ordinated by the Department of Treasury and Finance, was promised in the 2005/06 WA Budget. Feedback is required by August 31, with the final report due in April next year.

“Furthermore, although this proposal could be expected to increase compliance costs for insurers who operate nationally (unless other states followed Western Australia’s lead), the Insurance Council of Australia (ICA) has advised that it would still support the proposal,” the report said.

ICA’s submission says stamp duty on insurance products in WA is highly inefficient and inequitable. If it was removed over time, there could be substantial economic, social and political gains for the state and the WA Government.

Regional Manager for WA Daryl Cameron told Sunrise Exchange News stamp duty should be removed first from home and contents policies, then from the GST.

“Stamp duty on the GST that is attached to the premium represents $40 million a year in WA,” he said.

Mr Cameron says unfair tax on insurance is an issue that the industry has been lobbying against for some time. The storm that hit the southern suburbs of Perth and Bunbury last year causing more than $53 million in losses “really indicated the level of underinsurance and non-insurance in WA”.

“The argument of reducing underinsurance and non-insurance, and the unfairness of having a tax upon a tax, is a substantial case for reform.” 

Mr Cameron says the recent budget had a surplus of $2 billion, and economic growth was 9.5% in the 12 months to the end of March this year.

“The Government is in a favourable position to remove this unfair tax,” he said.

National Insurance Brokers Association President Steve Ball says the association has put forward an application to federal Parliamentary Secretary to the Treasurer Chris Pearce to have the GST removed from various state stamp duties.