The announcement today that the fire service levy (tax) for Insured’s located in rural victoria is yet another disencentive to full insurance.
The harsh reality is that far too many home and business owners are under insured when a major loss occurs. This was shown during the Victorian ‘Black Saturday" Bushfires and more recently in the spate of natural disasters that has hit Australia over the first 6 months of 2011. Over 168,000 claims have been lodged with an estimated payout by insurers standing at over $4,000 million.
It is in everyone’s interest for people to be fully insured against such losses. This of course includes the Australian and Victorian governements, the economy and in cases of disaster the fabric and survival of rural communities.
To increase the fire service levy on rural Victorians by a massive 30.76% from 65% to 85% of the base premium causes a much greater increase due to the triple taxation on insurance with GST and State Government Stamp Duties on insuranxe also being charged on the fire service levy.
This triple taxation means that for a $1,000 premium a policy holder insuring their shop, or other business now pays more than $2,238.50 due to this triple tax.
If you more than double the price of any commodity or service people buy less. The tax on fire services is on the prudent and risk averse and the less people buy the higher the tax has to be as a percentage of premium.
The Liberal and National parties in Victoria campaigned heavily against this unfair tax and it is disappointing that it has hit this huge level under their watch. The new coalition government while still committed to the removal of the tax have delayed the transition by 12 months until 1 July 2013.
The Victorian Government’s Department of Treasury and Finance have prepared a paper tentitled Victorian Fire Services Property Levy – Options Paper June 2011. LMI Group’s Dr Allan Manning urges everyone to read the paper and make a submission before the deadline of 30 September 2011. A link to the paper can be found at: http://www.dtf.vic.gov.au/CA25713E0002EF43/WebObj/FireServicesOptionsPaperJune2011/$File/Fire%20Services%20Options%20Paper%20June%202011.pdf
The tax needs to be abolished in the other states that impose this unfair and unjust levy namely New South Wales and Tasmania to encourage everyone in our communities to be fully insured and protected should the worst happen to them by fire or any of the other insurable perils such as storm, impact, earthquake, hail, and the like.
All of us within the Insurance industry needs to raise this with their local member. All of us at LMI certainly will be.