The 2009 Victorian Bushfires Royal Commission has called for the fire services levy to be replaced by a property-based levy.

The royal commission handed down its final report on Saturday after an 18-month inquiry into the February 7 disaster which killed 173 people and caused losses estimated at $4.4 billion.

It has made 67 recommendations, with number 64 calling on Victoria to “replace the fire services levy with a property-based levy and introduce concessions for low-income earners”.

“The fundamental problem with the current funding model is that it is inequitable,” the final report says. “Those who do not insure or who underinsure avoid making a proportionate contribution to the funding of fire services but are afforded the same protection as those with insurance.”

The three commissioners state their disagreement with a previous contention by the Victorian Government that there is insufficient data to justify replacing the scheme.

“It is sufficiently clear from studies conducted by the Australian Securities and Investments Commission and the Insurance Council of Australia, and from evidence tendered to the commission, that a proportion of homes are not covered by building insurance, a much greater proportion of households do not have contents insurance, and many households are underinsured.”

The report criticises the existing levy system for its “cascading” effect on the buyers of insurance, with the levy acting as a third level of taxation alongside GST and stamp duty, with each “building on the preceding one”.

The recommendation to axe the fire service levy was widely anticipated after an interim report released in August last year highlighted widespread opposition to the charge levied on buyers of insurance.

That was followed by a submission to the commission in April by lawyers assisting the inquiry, who described the system as inequitable and lacking in transparency.

The levy has met with growing opposition especially in country Victoria, where the charge soared as high as 84% of the base premium after Black Saturday.

Victorian Federated Farmers President Andrew Broad says the findings discredit the Victorian Government’s argument that retaining the levy is the best way to build fire risk factors into insurance costs.

“The fire services levy must go,” he said on Saturday. “There is no reason to delay the eradication of this failed funding model any longer.”

The Victorian Government has previously said it will consider the commission’s recommendations in its own review of fire services funding in a white paper due to be released by the end of February – three months after the November election.

Previous recommendations to scrap the levy by influential reviews such as the HIH Royal Commission and the Henry Tax Review have failed to result in changes to the current system, which also exists in NSW and Tasmania.