IPART Recommendations on Insurance Tax Reform in NSW a Winner for Consumers

The Insurance Council of Australia has welcomed the recommendations relating to insurance tax reform in NSW by the Independent Pricing and Regulatory Tribunal (IPART) released today.

“The specific recommendations relating to funding fire services in NSW through local government, rather than maintaining the current inefficient system of insurance policyholders paying (the ‘fire services levy’ – FSL), is a significant reform, that will lead to more effective and equitable funding of fire services in NSW.” Kerrie Kelly, CEO of the Insurance Council said.

Under the current FSL system in NSW, not all users of fire services in the community have to contribute to fire services funding.  Instead, the burden unfairly falls on consumers who are insurance policyholders.  The FSL on insurance products can add up to 20% to the cost of a basic insurance policy.  This in turn directly contributes to the incidence of non-insurance in the NSW community. 

Proposals in the IPART report to reduce stamp duty on general insurance products from 9% to 6% in NSW will also deliver significant benefits to consumers.

The Insurance Council and its members agree with IPART that ‘stamp duty on insurance products are among the most inefficient of state taxes and that there is a strong case for abolishing them entirely.’

“This finding by IPART is consistent with the work already undertaken by the Insurance Council in the area of state tax reform on insurance products.  We will continue to pursue this issue on a state basis and also federally through the recently announced federal taxation review,” said Ms Kelly.

“Today’s recommendations by IPART are a significant first step in the crucial area of tax reform of insurance products – if adopted in their entirety by the NSW Government they will provide major benefits to consumers in NSW.”

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