State Labor insurance taxes of up to 82% are undermining the hard work done on tort law reform to deliver more affordable insurance cover for Australians, Parliament heard today.
Assistant Treasurer, Mal Brough, said that two recent reports commissioned by the Government found that public liability insurance premiums had fallen by up to 4.8% in the 12 months to December 2004 following insurance reforms. However, State Labor government taxes were blocking the path to making insurance even more widely available at more affordable prices.
The reduction in public liability and professional indemnity insurance premiums "is good news for Australian business. But, unfortunately, there are still some real impediments to the affordability of business insurance, public liability insurance and professional indemnity insurance and they are the Labor state and territory governments," Mr Brough said.
"So, on one hand, whilst [State] Labor governments have worked well to bring down tort law reform and that is having downward pressure overall on premiums, on the other hand the state Labor governments continue to charge these exorbitant taxes and taxes on taxes to our business community stymieing the growth of business."
Examples of high state insurance taxes include:
- In regional Victoria, for every $100 that policyholders pay in premiums, they are slugged with up to an extra $82 in state taxes in the form of fire services levy, GST and stamp duty.
- Between 7.5% (Queensland) and 11% (South Australia) in stamp duty imposed on insurance after GST is applied to premiums (a tax on tax).
- The total level of taxes on business property insurance alone, by State is NSW (36.7%), Vic (Up to 82%), SA (35.5%), Tas (up to 52.1%), WA (21%), ACT (21%), QLD (27.1%).
- A report to the Insurance Council of Australia found that the States have increased their tax take on insurance by 51 per cent over the last five years, now collecting $3.2 billion.
"State Governments can make a significant difference to community groups and small businesses by removing arbitrary and exorbitant fire services levies and stamp duties since they already receive the benefit of GST on those premiums," Mr Brough later said.