Allianz congratulates IPART on insurance taxes ‘no brainer’

12 June, 2008

Allianz congratulates the NSW Independent Pricing and Regulatory Tribunal on the recommendations to reduce insurance taxes contained in its draft report on its Review of Taxation.

Nicholas Scofield, General Manager Corporate Affairs, said “Allianz was always confident that a tax as inefficient as the Fire Services Levy (FSL) couldn’t survive the rigorous scrutiny of a body like the Independent Pricing and Regulatory Tribunal.”

“It is only a quirk of history, combined with bureaucratic inaction and lack of political will that could see something like the Fire Services Levy on insurance survive into the 20th Century let alone the 21st.”

“Total taxes on property insurance in NSW resulting from the cumulative effect of Fire Services Levy, GST and Stamp Duty are around 50%. So, on a base insurance premium of, say, $1000 for building and contents insurance, additional taxes of around $500 are levied on top.”

“It is hardly surprising that NSW, with the second highest insurance taxes in the world, has high levels of non-insurance and underinsurance. The situation is even worse in Victoria were the cumulative tax impost on some business insurance recently topped 90%, allowing Victoria to maintain its infamous record of levying the highest insurance taxes in the world, again, thanks to its Fire Services Levy.”

“The horrendous levels of taxation on insurance, due to the combined effect of Fire Services Levy, GST and Stamp Duty, see insurance taxes keeping company with the so-called ‘sin’ taxes on things like tobacco, alcohol and gambling. Yet insurance is a social good.”

“In the context of the tax-on-tax-on-tax effect, it is particularly pleasing that IPART has recognised the folly of insurance taxes in general, and also recommended that Stamp Duty on insurance be reduced.”

“From a tax policy perspective, removing Fire Services Levy from insurance is such a ‘no brainer’, to not make such a recommendation would put a large dent in the credibility of any tax review. Thus, Allianz waits in anticipation of the outcome of the Commonwealth’s review of taxation headed by Ken Henry, Secretary to the Treasury.”

“Surely, recommendations to reduce insurance taxes by the likes of IPART and, one hopes, the Commonwealth’s Henry review, combined with a renewed approach to Commonwealth-Sate financial relations, will heralt the death knell of the tax policy madness that taxing insurance represents.”

Media enquiries

Nicholas Scofield
Allianz Australia Insurance
Ph. +61 2 9390 6596
Ph. 0416 088 414

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The Allianz Australia Group operates in Australia and New Zealand. It is one of Australia’s largest general insurers, a leading private workers’ compensation insurer, and also provides life insurance.

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