The Victorian Government is still undecided on how to implement a property-based fire services levy.

An options paper released late last week is seeking comments on whether the levy should be calculated on the site value, the improved value of property or just the capital improvements value.

The paper argues that basing the levy on site values would impact on properties with low improvement values, whereas a levy charged on improved values would mean those people who will benefit from the fire service would pay a more appropriate amount.

A levy based on improved capital values would not detect whether the gains were in the site or building, but it would be more consistent with local councils’ rating systems. This could reduce collection costs.

The paper says councils will collect the new levy and will receive financial help from the Government to cover costs.

All properties are expected to be liable to pay the levy, including government and council-owned buildings. There would be concessions for pensioners, veterans and healthcare cardholders.

The Government believes there could be a reduction in property and contents underinsurance after the new levy is introduced.

The paper notes that when the insurance-collected FSL system was scrapped in WA in 2003, take-up of insurance increased.

Victorian Treasurer Kim Wells says the consultation paper is the first step in introducing a significant and long-overdue reform to ensure Victoria’s fire services are appropriately funded.

“Every Victorian understands the need to have well-funded firefighting services and the release of the consultation paper is an important step in implementing this new approach,” he said.

Submissions on the FSL options paper close on September 30. The Government plans to introduce the legislation into the Victorian Parliament in early 2012.

There will be a transition period from July 1 next year to allow insurers to phase out the levy from policies before Victoria switches to a new collection model on July 1, 2013.