The Federal Government will soon release a discussion paper on tax reform, and Assistant Treasurer Josh Frydenberg has urged the insurance industry to participate.

The paper is due by the end of the month and will start a consultation process leading to a tax white paper that will inform Coalition policies going into the next election.

Mr Frydenberg told the Insurance Council of Australia (ICA) Regulatory Update seminar that insurance stamp duties “are one of the most inefficient taxes in Australia”, raising the cost of cover and contributing to underinsurance or non-insurance.

“Yet state governments still raise about $5.7 billion per year from insurance taxes” – about 8% of total state tax revenue.

Mr Frydenberg has not suggested how the lost revenue could be replaced.

ICA President and IAG Personal Lines CEO Andy Cornish told the seminar that while there is no “magic spell” to improve insurance affordability in north Queensland, removing state taxes on insurance there would provide quick relief.