The Insurance Council of Australia
has released its latest research into the “inefficient” insurance taxes that are costing the Australian economy billions of dollars.
The research, complied by Deloitte
Access Economics on behalf of the ICA, found that the Australian economies could benefit by billions of dollars if insurance taxes are replaced with a commensurate rise in land taxes such as council rates.
ICA CEO, Rob Whelan, noted that the changes were designed to be revenue-neutral but showed how much states could benefit from a tax change.
“The modelling shows significant rises in both household consumption and government revenue when governments implement this long-overdue financial reform,” Whelan said.
“Household spending rose in every state and territory once insurance levies were replaced by more efficient taxes, leading to an increased tax intake for governments.”
New South Wales would be the biggest beneficiary with $3 billion in extra consumption over the next five years followed by Victoria ($1.08 billion), Queensland ($582 million), South Australia ($298 million) and Western Australia ($263 million).
Whelan called on the New South Wales Government
to address its tax issues as the state currently imposes both stamp duty and an emergency services levy, as insurance taxes can lead to underinsurance throughout the community.
“The Baird Government
could reap an extra $400 million dollars by implementing a reform that’s long been advocated by independent inquiries, as well as the participants at last month’s National Reform Summit,” Whelan continued.
“The ACT Government
could raise an additional 2.24 percent in tax revenue, while South Australia and Victoria would gain about half a percent – significant yields in the context of a state or territory budget.
“Not only are taxes on insurance highly inefficient, they substantially increase the incidence of under-insurance and non-insurance in the community.”