“The report is another voice in the call for removing unfair and inequitable taxes on insurance.”
Those were the words of outgoing Insurance Council of Australia (ICA) chief executive Rob Whelan when the representative body expressed its support for the Independent Review into South Australia’s 2019-20 Bushfire Season’s recommendation to remove stamp duty from home insurance.
One main takeaway from the review that the ICA is particularly in agreement with is the assertion that more would be taking out insurance if taxes were removed.
Currently, South Australia applies an 11% stamp duty to household premiums.
“Stamp duties are an unfair burden on South Australian households and businesses that do the right thing in insuring their assets against bushfires, storms, and floods as well as everyday risks,” declared Whelan. “Stamp duties make insurance more expensive and lead to underinsurance and non-insurance.
“The ICA agrees there is an immediate need to remove stamp duty from insurance for low-income earners and those in high-risk areas. However, this should only be a transition mechanism ahead of the removal of all state taxes on insurance products for all customers.”
In the trade body’s view, state taxes are “especially damaging at present,” with communities and businesses in South Australia struggling with the impact not only of the bushfires, but also of the COVID-19 pandemic and the recession.
Whelan went on to note: “Keeping this style of tax is indefensible by any state or territory. The economic case for the abolition of insurance-based state taxes and levies is widely accepted, having been canvassed in numerous federal, state, and territory government reviews.
“The ACT (Australian Capital Territory) was able to remove its stamp duties on insurance and find fairer and more efficient revenue sources. All state governments, including SA (South Australia), should prioritise this reform.”
