Victorian Premier John Brumby is standing by the state’s controversial fire services levy on general insurance despite it coming under scrutiny by the Federal Government’s review into Australia’s future taxation system.

State Nationals Leader Peter Ryan has tabled a letter in State Parliament from the review secretariat confirming the review of the levy “along with other taxes and transfers”.

Fire services levies have come in for strong criticism in NSW as well as Victoria.

Mr Brumby made his continuing intransigence about changing the system very clear, telling Parliament it is “a long-standing tradition” that the insurance industry makes a contribution to the cost of fire protection in Victoria, “and the best way of doing that is through a risk-based levy”.

But Mr Brumby’s opposition to change isn’t preventing an internal examination of the best way to ensure the whole community supports the fire services. He says the state wants to lift aggregate levels of insurance cover across the community in the wake of the February bushfires and that the Treasurer is “looking into this”.

Major insurer IAG told the Federal Government tax review the fire services levy is “a poorly targeted and inequitable mechanism for distributing the cost of fire services”.

In May rural and metropolitan homes and businesses in Victoria and NSW were slugged with a one to five percentage points rise in their fire services levies.

In country Victoria, businesses now pay a levy of 68% on top of their premium, as well as 10% GST and 10% stamp duty on top of that. This means they now pay more than $1 in tax for every $1 in premium.