Fresh from gaining insurance industry praise for dropping its fire services levy, the WA Government has dumped more stamp duty on insurance-buyers. In doing so it’s ignoring the call by one of the state’s most senior lawmen, HIH Royal Commissioner Justice Neville Owen, for governments to eliminate state taxes on insurance.

The WA decision comes on top of an identical move by the cash-strapped Victorian Government, which has raised its stamp duty on premiums by more than 23%. Making it even worse for Victorian policyholders, the Bracks government is also about to dump a huge fire services re-equipment bill on its local insurers as well.

The NSW Government is so far the only one to have acknowledged a link between stamp duty and underinsurance and non-insurance, last year cutting its insurance stamp duty in half to 5%.

More than $700 million in fresh stamp duty will be released in WA over the next four years to help fund increased spending in health. WA Treasurer Eric Ripper says the Government has been “forced” to increase taxes and other revenue by $182 million this year in order to invest an additional $232 million in health services.

Daryl Cameron, the Insurance Council of Australia's (ICA) Group Manager WA and NT, says the move came as a surprise, considering the steps WA has undertaken to reduce the cost of insurance by abolishing the levy. “The WA Government has done a backflip on its commitment to reduce the impost of state taxes on people who are prudent enough to protect their assets with insurance.”

Mr Cameron said an ICA study last year shows approximately one in six small businesses and one in four households in WA don’t have insurance, and called for an urgent review into ways to make insurance in WA affordable.

“The Government is doing itself a dis-service, because the increase in stamp duty will discourage people from protecting their property with insurance and in turn will continue pressure on state-funded appeals when disaster strikes,” he said.