The ACT is on target to abolish all insurance taxes by July 1 2016, Treasurer Andrew Barr announced in last week’s budget.

He says the territory will remove a number of inefficient levies and replace the revenue through general rates collection.

Rates on general insurance premiums will drop to 4% from 6% this July 1, while the duty on life cover will fall to 2% from 3% as the taxes are phased out.

General insurance taxes are estimated to have raised $33.54 million in 2013/14, which will drop 30% to $23.48 million this financial year.

In 2012 the Government announced it would abolish its 10% insurance duty over five years.

The Insurance Council of Australia has welcomed the move as producing significant benefits to consumers.

“Unfortunately, other states are reluctant to change their stamp duties on insurance, and Tasmania and Queensland have increased… [theirs] in the past two years,” CEO Rob Whelan said.