Another way of looking at the tax figures.

There has certainly been a lot of industry news about the New South Wales government reviewing the fire service levy in that state. The insurance industry has not had much to be happy about of late and good change should be reported, celebrated and congratulated.

The Insurance Council of Australia rightly joined the party by issuing a press release today. See http://www.insurancecouncil.com.au/media/92297/120612-ica-welcomes-nsw-budget-steps-towards-tax-reform-final.pdf.

While the article mentions that the emergency services levy increases the cost by 36% for commercial insurance (commercial, rural, contract works and business interruption) and home and contents at 21%, this is, in reality, not the true figure.

What is being missed in these figures is the triple tax figures brought about by GST and State Government Stamp Duty being imposed on the FSL rates. What the ICA have quoted is the current FSL rate only.

Based on a Fire Service Levy of 36% on Commercial, 21% on Home and Contents, plus GST at 10% and NSW State Government Stamp Duty at 9%, it is, in reality, 63.064% for commercial and 45.079% for domestic, which, depending on whether you are talking about commercial or domestic property insurance, is either side of double the rates quoted by the ICA.

I feel it is important the difference is highlighted here as the three taxes combined goes a long way to explain the high levels of under and non-insurance in New South Wales and Victoria and why the removal of the fire service levy needs to be removed from insurance.

Once again, I applaud the New South Wales government for their initiative.

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