Insurance Taxes at last some good news – For the Australian Capital Territory

After all the bad news of significant increases in insurance taxes (Fire Service Levy) in Victoria and a 25% increase in Stamp Duty on insurance policies in Tasmania it is refreshing to see that one government gets the link between increases in the price of insurance and reduced coverage.

An independent study conducted by the Centre for Law and Economics at the Australian National University estimated the number of households with building insurance would increase by 13% if stamp duties were removed in the ACT and NT. This is in line with fundamental basic principle of economics. It is why governments increase the price of cigarettes, alcohol and fuel, to get the public to buy less.

I would like to see the Centre from Australian National University crunch the numbers on the effect of FSL, GST and Stamp Duty on levels of under insurance and non-insurance in Victoria. Perhaps I do not as it would only make me feel sicker than I do on this subject.

But what government in their right mind would want people to buy less insurance? At least the ACT Government get it and good on them.

While I and many in the insurance community welcome the WA Government’s decision to hold Stamp Duty, the reality is that it is near equal to the highest in Australia. Tied with, yes you guessed it, Victoria. In fairness South Australia at 11% is the highest, WA, Victoria, Tasmania, ACT and NT are all currently at 10% Stamp Duty on insurance.

I say it again. Well done ACT Government. You are showing real leadership something that this country and economy really need at this time when it is so tough for so many. No FSL on insurance and by the end of 2016 no Stamp Duty. Well done!

Could it get any better in the ACT? Well yes they are also looking to reduce Payroll Tax! While I privately applaud this as I think Payroll Tax is as stupid a tax as taxes on insurance, my focus remains the removal of insurance taxes, I believe this is so important as you need the business to survive a major loss to continue to employ people, pay  taxes and contribute to the economy. If a business is under insured or not insured, then there is every chance it will fail, the owners and staff end up on the unemployment line or take early retirement. Where is the benefit to the community or economy of that!

On the subject of insurance taxes, the most asked question of me of late is if the government tax to the insurance industry has gone down for this coming financial year, why has the FSL being charged higher by insurers. I will cover this topic in my normal postings over the weekend. Stay tuned.

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