The SA Government wants to reform the state’s tax system, including the way levies are imposed on insurance.

Premier Jay Weatherill says the state tax review discussion paper, released last week, will attract “competitive, sustainable and fair” ideas from businesses and other stakeholders.

“The State Government is open to radical reform to our state taxation system,” he said. “Nothing is out of bounds, be it taxes, levies or concessions.

“Our state taxation system offers the means to provide high-quality services that the SA community values and that make our state a great place to live and raise a family.”

The discussion paper says a range of insurance covers are taxed, including an 11% levy on general and compulsory third party (CTP) premiums.

The state imposes a 1.5% tax on life insurance premiums and an annual levy of $60 on CTP renewal notices.

Levies on insurance add about $500 million a year to the state’s coffers, the paper says. A tax on insurance premiums is one of the most inefficient methods of raising revenue, because it tends to discourage consumers and businesses from obtaining proper cover.

“There is no perfect state revenue replacement for insurance taxes because insurance taxes are paid by homeowners, business and tenants, and neither the payroll nor property base directly picks up all potential payers of insurance duty,” the discussion paper says.

“The Government is interested in community views on insurance taxes, including how any revenue lost from reforming insurance taxes could be raised from a reformed state tax base.”

The Insurance Council of Australia (ICA) and the National Insurance Brokers Association (NIBA) have welcomed the planned tax overhaul.

ICA CEO Rob Whelan says levies on insurance should be removed because they are “unfair, inefficient and inequitable” and discourage consumers from being properly insured.

“We have long argued for the abolition of all state levies and stamp duties, and believe action is achievable if state and federal governments work together on tax reform,” he said.

NIBA CEO Dallas Booth has echoed Mr Whelan’s comments.

“Insurance taxes directly affect the affordability of insurance,” he said. “As such, they contribute directly to underinsurance and non-insurance across the community.”

Submissions on the discussion paper close on April 10.