Yet more taxes on Insurance – Tasmanian Government increases stamp duty by 10%

Governments only see $ when it comes to insurance.

It really has been the worst month or two for anyone who wants to insure. On top of the:

  • Victorian Government having their last big cash grab $580 million from insurance as a Fire Service Levy and completely messing up the transition so that most business and home owners that insure will be paying at least some of the tax twice
  • The Victorian Government ripping out a $470 million “dividend” from WorkCover 0ver 4 years
  • The Federal Government taking a $100 million “dividend” out of the Terrorism Pool, with more to come for at least the next three years becoming yet another hidden tax on business, particularly SMEs.

We now find that the Tasmanian Government, not appreciating and or caring on the effect of that under insurance and no insurance on home and business owners does have, announced in yesterday’s budget, thatthey will increase the  State Government Stamp Duty on insurance.

What they do realise while counting their windfall like Midas of old is that the 2% increase is also on the GST and the Fire Service Levy they charge. Tax on Tax on Tax. If any business owner were to charge double they would be hauled before the ACCC but our governments, particularly those in Tasmania, New South Wales and worst of all Victoria do it with impunity.

As someone who knows the basics of economics that dictates that when increase the price of something people buy less it is heart-breaking as I and my team at LMI spend our days trying to put people’s lives back together after fires, floods, storms etc. It is so hard with the very high level of insurance we have in this country.

The most frustrating thing of all for me is that a government’s primary responsibility is to protect their constituents and the economy that they have been charged with governing. This obsession of trying to appear fiscally wise is a nonsense when you put the home and business owners life’s work at risk by not taking out full insurance.

Worst still is the fact that much of the tax is hidden. For years I have watched Australia’s Foreign Affairs Ministers and Prime Ministers of both political  persuasions dictate to our near neighbours about the need for responsible transparent and honest government to ensure that the developing country’s economy prospers. I really believe that this is so hypocritical as with the hidden taxes and disincentives imposed on business and home owners in Australia has reached absurd levels.

The trouble is that like Midas, Scrooge or anyone else that puts money above everything else, governments learn too late what happens to our communities when a major natural disaster occurs. Then Premier John Brumby saw first hand the effects on towns where the draconian fire service levy meant that there was mass uninsurance. The problem for us as an economy is that the government rightly gets voted out before they can fix the mess having now understood it.

If you make even the most cursory of comparisons with other forms of revenue making such as a tax on gambling, a tax on tobacco, a tax on alcohol or traffic fines which we all know is revenue raising, a government can justify it as they have to fund the mess that these industries, products, or in the case of traffic offences that the behaviour creates especially on the health system but also on the wider community.

Insurance on the other hand protects individuals and the community. To see that taxes on insurance now equates to 7.5% of state revenue in Tasmania beggars belief that yet another bunch of our politicians really have no idea what they are doing and why they have been elected!

2 responses to “Yet more taxes on Insurance – Tasmanian Government increases stamp duty by 10%”

  1. Allan says:

    Appreciating just what effect hidden taxes on insurance does to business, particularly SME business, the Western Australian has bucked the trend and decided not to join the Federal, Victorian and Tasmanian Governments by raising taxes on insurance. They have left Stamp Duty on hold while they got rid of Fire Service Levy way back in the 1990”s.
    While the mining boom does help the state, the fact that the taxes on insurance are, like Queensland, the lowest in Australia means that it is easier to do business in these forward thinking states.

  2. Det says:

    An really intriguing examine, I agree completely. You make some quite legitimate points.

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