Opponents of insurance taxes have made their collective voice heard during the initial stages of the Federal Government’s wide-reaching review of taxation.

Stamp duty and the fire services levy have been included in a consultation paper released by Australia’s Future Tax System review panel last week.

The paper says submissions received to date claim insurance taxes “may encourage people to either underinsure or not to insure at all by increasing the cost of insurance products relative to other goods”.

“While this itself is inefficient, it may also lead to an increase in government expenditure if assistance is provided to the uninsured in the event of a disaster,” the paper said.

“Further, the fire services levy – which is levied on insurance companies to partly fund fire brigades – can exacerbate the effects of the stamp duty on insurance.”

Federal Treasurer Wayne Swan unveiled the federal tax review in May in the hope it will streamline taxation at all levels to support future economic and social outcomes.

In regard to general state tax matters the consultation paper notes there is a “widely held view in submissions that the current state tax arrangements need to be reformed”.

Lobbyist John Hanks says he is optimistic but the discussion is at a preliminary stage.

“It will not be changed overnight, as people still need to be educated,” he told insuranceNEWS.com.au. “The review is very credible and people will have to take the panel seriously.

“There’s no reason not to be positive and there is hope there will be a good outcome that will encourage states to move on the issue,” he said.

The panel will now take further supplementary submissions until May, ahead of a final report due next year in December.