The ACT Government has delivered on its pledge to abolish insurance tax in the 2016/17 budget, and the Insurance Council of Australia (ICA) has called on other states and territories to follow suit.

Chief Minister and Treasurer Andrew Barr says abolition of the tax, effective from July 1, means a Canberra household paying $3000 per year in insurance premiums will save $300.

“A business with $10,000 of insurance premiums will save $1000 per year,” Mr Barr said.

ICA spokesman Campbell Fuller says the ACT initiative is very welcome.

“Insurance stamp duties have been consistently highlighted as inefficient, and contributing to the incidence of non-insurance and underinsurance,” he told insuranceNEWS.com.au.

“ICA strongly urges other state and territory governments to follow the ACT’s example, which is supported by the recommendations of such reports as the Productivity Commission inquiry into natural disaster funding arrangements and the Henry tax review.”

National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au the ACT Government should be commended for scrapping the “undesirable” and “unfair” tax.

“Insurance tax really becomes a disincentive for a purchase for what is really a community good,” Mr Booth said.