A new ACT government review of tax reforms it began in 2012 concludes that a decision to scrap taxes on insurance has not impacted the territory’s budget.

The tax changes made so far, which included dropping a 10% duty applied to general insurance premiums and 5% duty on life insurance, only sliced $62 million -- or around $9 million a year -- from revenue, which still came in at $4.806 billion.

So far, an increase in general rates of $793 million over the period compares with revenue forgone from stamp duty and insurance duty of $855 million.

The ACT Government was the first and so far only jurisdiction in Australia to axe insurance stamp duties, and it recently pledged that “inefficient and unfair taxes such as stamp duty and insurance duty will continue to be reduced”.

“The Government’s tax reform program has been broadly revenue neutral to date,” the review says. “The revenue forgone is a small proportion of the total revenue generated from stamp duty, general rates, commercial land tax and insurance duty over the reform period.”

The ACT is a third of the way through a 20-year tax reform program which it says will replace “inefficient taxes such as stamp duty and insurance duty with broad-based land taxes such as general rates”.

Most states and territories add a stamp duty of 9-11% to the base premium on top of GST, resulting in total taxes of up to 22% on insurance.

The Insurance Council of Australia (ICA) says the ACT report highlights the benefits of the decision to axe insurance stamp duties, showing economic growth and efficiency, with household consumption and investment up every year and the increases growing over time.

State and territory taxes and levees on insurance customers are expected to come to $6.3 billion this year.

“Taxes on insurance are inefficient, unfair and inequitable and penalise Australians who seek to reduce their risk exposure by purchasing insurance,” Insurance Council of Australia spokesman Campbell Fuller said. “These taxes are a direct cause of underinsurance and non-insurance and are detrimental to economic performance.

“The benefits of removing unnecessary taxes on insurance are clear. Removal of stamp duty has delivered cost-of-living savings to ACT households and businesses without having much impact on government revenue.”