Household contributions to the fire service are expected to fall by $120 between this year and next under reforms to the Victorian Fire Service Levy.

The current insurance-based system is deemed “highly flawed, unfair and needed reform”, according to treasurer Michael O’Brien.

The reformed levy will incorporate a fixed charge component of $100 for residential properties and $200 for all other properties plus a charge based on the capital improved value of the property.

From 1 July this year, the average household's contribution in a Country Fire Authority (CFA) area for fire services is expected to reduce from an average of $262 in 2011-12 (the last full year of the insurance-based levy), to $142 in 2013-14.

Contributions from households in a Metropolitan Fire Brigade (MFB) area will reduce from an average of $193 in 2011-12 to $143 in 2013-14.