ICA supports Tasmania’s decision to remove insurance tax
ICA supports Tasmania’s decision to remove insurance tax | Insurance Business Australia
Insurance News
ICA supports Tasmania’s decision to remove insurance tax
The council says that NSW should follow suit
Insurance News
By
Abigail Adriatico
The Insurance Council of Australia (ICA) had welcomed the Tasmanian Government’s decision to abolish the Fire Services Levy (FSL) that was charged on business insurance policies.
“The Insurance Council of Australia welcomes today’s news as a step forward for communities and businesses across Tasmania,” said Kylie Macfarlane, ICA’s acting CEO.
What does this decision mean for businesses?
Historically, the levy had been used to fund fire and emergency services. However, these levies and taxes had received several criticisms that they were unfair and distorted consumer behaviour.
“The responsibility for funding these vital services will now be shared by the entire community, not through an impost on businesses who purchase insurance,” said Macfarlane. “This change will undoubtedly lead to improved insurance affordability and will encourage more businesses to insure their assets at a time when appropriate cover is needed more than ever.”
The ICA said the tax’s abolishment would deliver a more transparent, efficient, and equitable fire services funding model, which had long been an initiative driven by insurers and the business community.
ICA’s call for New South Wales to follow suit
With the Tasmanian government’s removal of the insurance tax, New South Wales is now the only state to still use tax that was levied on insurance customers meant to fund emergency services. The ICA urged the NSW government to follow in Tasmania’s footsteps.
“It is now incumbent upon the New South Wales government to follow the lead of the Tasmanian government and reform the ESL to find a fairer way to fund emergency services in that state,” said Macfarlane.
Currently, the New South Wales Emergency Services Levy (ESL) adds an estimate of 18% to home insurance premiums and up to 40% to business cover.
The state’s ESL was forecasted to collect $1.4 billion in revenue from insurance customers in 2023 up to 2024 as premiums have seen significant increases due to worsening and much more frequent weather events.
Insurance customers in New South Wales reportedly pay almost three times the amount of state taxes paid by Victorian insurance customers, which has contributed to about 13% of households being uninsured in the state. This rate was twice as the one in Victoria.
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