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Time to abolish Taxes on Insurance

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Time to abolish Taxes on Insurance

An extra 20% of taxes are added onto all Queenslanders Insurance policies. For every $100 in premiums you pay, Goods and Services Tax (GST) is added to make $110 and then a further 9% is added by the Queensland Government in the form of a “Stamp Duty” to make a total of $119.90. This is also not taking into account a Terrorism Levy on all Property Insurance.

While the Queensland Government can point out that we still have the lowest Stamp Duty in Australia, along with NSW at 9%, it does not get away from the fact that the Insurance Industry was told prior to the introduction of a GST, that this tax would replace inefficient taxes such as State Government Stamp Duties, it did not happen. We were tricked by the Conservative Government at that time.

All property owners should protect their assets with Insurance, every person needs to have liability cover in case they accidentally cause injuries or property damage to another person. However adding $20 on top every $100 of premiums charged by Insurance Companies is a disincentive.

We hear politicians carrying on about the fact a Carbon Tax which has added only 1% to everyone’s electricity costs (offset by income tax cuts too) making it a major election issue, maybe insurance taxes are not an issue because you can avoid them by just not taking out any insurance policies? However everyone needs electricity, everyone needs power to run their machines and lights. However many people can also reduce these taxes by putting Solar Panels or wind turbines on their roofs.

Maybe such issues are not of interest to people because Insurance companies do not have a high standing in the community in the media’s eyes. They would have a better standing if Insurers could charge cheaper premiums making insurance more affordable for the risks covered.

I personally believe that taxes on the bad things that happen in society is a good incentive for people to reduce their activities. If a tax on petrol causes people to buy smaller less polluting cars, great. IF taxes on Cigarettes makes people smoke less, great. If taxes on Carbon pollution reduces emissions into the atmosphere, this is also good thing, especially if it leads to less weather related disasters.

So how much less does Queensland pay compare to other states? Well the ACT only pays 6% Stamp Duty. However, Victoria, Western Australia, Tasmania and the Northern Territory all pay 10% with South Australia the most expensive with 11%. It is true too that many companies can claim back the GST as an imputed tax credit. However, for the private consumer, they pay it all.

It is estimated that 83% of Householders under insure their homes. Worst still is that 42% of homes do not bother to have insurance. A lot of it has to do with Insurance being affordable for everyone. A situation not helped by having to pay an extra 20% in taxes.

I believe everyone should have insurance protection on everything they own or do. But I accept the fact not everyone can afford it, they are more likely to if Stamp Duties were abolished on Insurance Contracts.

Last changed: Aug 31 2013 at 11:59 AM

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