The Victorian Government has budgeted for reduced insurance tax revenue growth in 2015/16, due to pressure on rates.

The state budget forecasts total insurance tax revenue of $1.156 billion, up 5.4%, rising to $1.234 billion in 2016/17, up 6.8%.

“Increased competition in the domestic general insurance market, due to a growing number of low-cost and overseas insurers, continues to put downward pressure on premiums,” budget papers say.

General insurance taxes are forecast to raise $919.5 million this financial year, $972.1 million in 2015/16 and $1.04 billion the following year.

Duty on compulsory third party premiums is forecast to deliver $175.2 million, $184.2 million and $192.5 million respectively.

Budget papers say the fire services levy on insurance premiums raised $2 million this financial year following its removal last July 1.

Life insurance duty – axed in last year’s budget – raised $300,000 this financial year.

Although the Government dropped the duty, it then levied it on cover linked with life insurance, such as trauma or disability cover. These “riders” are taxed as general insurance and the duty is 10% of the premium.