Insurers have condemned high rates of insurance taxes levied by the Victorian Government in submissions to a state parliamentary committee inquiry.

The cross-party Victorian Economic Development and Infrastructure Committee is currently investigating the effect of increased state taxation on jobs and state development.

Independent submissions from insurers IAG, its subsidiary CGU, Australian Unity, motoring organisation RACV and the Insurance Council of Australia (ICA) together portray stamp duty and the fire services levy as excessive, unfair, and inefficient.

The RACV claims the state’s fire services levy creates premiums that are “difficult to afford” and criticises the cascading effect of GST and stamp duty for inflating the final premium.

Together with joint venture partner IAG, the organisation insures more than one million Victorians through RACV Insurance. 

The RACV claims fire services levy rates of up to 84% have a “detrimental effect on the ability of individuals and communities to recover from disasters such as the Black Saturday bushfires”.

It recommends consideration of an alternative funding model and calls for the total abolition of stamp duty.

An IAG submission signed by Head of Group Strategy Alison Ledger calls for reform of insurance taxes in favour of a system “that does not penalise insurance relative to other more discretionary purchases”.

CGU calls for the introduction of a property-based fire services levy, saying it will lower the cost of insurance “and help deal with the issues of non-insurance and underinsurance that impact the whole community”.

The ICA submission also proposes the abolition of general insurance taxation in favour of more efficient state taxes.

The inquiry will deliver an interim report by February 28 ahead of a final report in September next year.