Federal Assistant Treasurer, Mal Brough, today called on the New South Wales Labor Government to live within its means and stop double dipping into the pockets of its taxpayers.
Not content with Federal Labor attempting to block income tax cuts, New South Wales Labor has climbed aboard the high tax treadmill. This is despite a $303 million budget surplus.
The NSW Government will raise the rate of stamp duty on general insurance from 5 per cent to 9 per cent. Tax revenue will be increased by $120 million in 2005-06 and $168 million in 2006-07.
This will lead to increased premiums for householders and small businesses.
New South Wales can afford to dump this punitive tax. It is outrageous to impose this extra tax when it is estimated NSW will receive $9.9 billion in GST revenue this year and to gain over $257 million from tax reform. It is even more outrageous when it is remembered the New South Wales Budget will be in surplus in 2005-06 by $303 million.
Labor has reinforced its reputation as a party of high taxation with the Carr Government's Budget announcement of a near doubling in the rate of stamp duty for various general insurance products.
Insurance products facing the increase include household, travel and mortgage insurance and certain types of commercial insurance, including farm and public liability insurance.
The Insurance Council of Australia estimates that the cost of the average home and contents insurance policy will increase by $50 a year. A small business with a base premium of $2000 would pay an extra $110 a year.
Both the insurance industry and the New South Wales Treasury have pointed to the dangers of people underinsuring as a result of higher taxes.
In October 2003 the Treasury warned:
It would be undesirable if consumers and businesses were not choosing to insure or under- insure because of higher prices caused by taxes on insurance.
QBE insurance has warned that the State government would end up paying for the costs of underinsurance, particularly in the wake of a major natural disaster.
Consistent with the recommendations of the HIH Royal Commission, the Commonwealth has called on the states to remove stamp duties from general insurance products. New South Wales is doing the exact opposite.