Replacing inefficient insurance stamp duties would enable state and territory governments to raise extra funds without increasing the tax burden, according to the Insurance Council of Australia (ICA).

Modelling released by KPMG shows replacing property stamp duties with a broad-based land tax could lift the NSW economy by $5 billion a year.

ICA CEO Rob Whelan says insurance stamp duties are just as inefficient as those on property.

The NSW Government last year announced the abolition of its emergency services levy in favour of a property-based charge, and Mr Whelan says it is “time to finish the job”.

“The Federal Government says the states and territories must raise more revenue themselves or find ways to operate within the current fiscal envelope,” he said.

“Switching to more efficient, less distortionary taxes is the obvious way to do this without increasing the overall tax burden.”

Mr Whelan says insurance policies are subject to stamp duty and GST, raising premiums by about 20% and discouraging households and businesses from taking out adequate cover.

“Analysis by Sapere Research has found abolishing state and territory taxes on insurance would enable Australians to protect their homes and household assets to the tune of an extra $36 billion.

“As Prime Minister Malcolm Turnbull himself has noted, in a country where natural disasters are so prevalent, insurance should be encouraged rather than taxed.

“Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer have both observed that insurance taxes are among the least efficient in the country.

“Many reports on tax reform and productivity – from the Productivity Commission to the Henry tax review – make the same point.”