The FSC has welcomed a report that condemns duties on insurance as being “…inefficient, inequitable, unfair, potentially causing serious human and social consequences, and leading to a national crisis of under-insurance”.
A statement from the council says the findings are contained in a draft report by the NSW review of Federal Financial Relations, chaired by David Thodey, which concludes by pressing “with urgency” for the abolition of all insurance taxes in NSW.
FSC CEO Sally Loane, says the council has long called for the removal of the regressive state government stamp duty imposed on life insurance, which have added substantial insurance costs for Australian consumers.
“We welcome the findings in the review and urge the NSW Government and other states to act quickly to implement this reform that has been supported by every major tax review.”
She says that stamp duties on products issued by life insurers discourage Australians from having adequate coverage, noting they are also recognised as one of the most inefficient taxes in the economy and cost Australians $644 million in 2018-19.
“Stamp duties on life insurance products coupled to superannuation accounts erode retirement savings by an estimated $235 million each year,” Loane adds.
“The harmful burden from taxes on life insurance substantially adds to under-insurance, which the NSW Review rightly denounces as causing major human and social problems.”
The FSC statement also notes that the review highlights that taxes reduce the scope for insurers to pool risks, leading to further increases in the cost of insurance premiums.