A bill to abolish stamp duty on life insurance products introduced into Queensland’s State Parliament recently has been applauded by the Investment and Financial Services Association (IFSA).
IFSA chief executive Richard Gilbert said the bill, which was introduced by Queensland Shadow Treasurer Dr Bruce Flegg, is essentially unfinished business, given that state ‘nuisance’ taxes and stamp duties were always intended to be progressively phased out after the passage of the Federal GST/New Tax System legislation.
“This is a matter that has affected our industry for years, we only ever hoped to get a uniform approach to this, but to have someone say, ‘let’s abolish duty’, this messy, inefficient tax, that is very gratifying,” he said.
The problem of state taxes on insurance products is not unique to Queensland, and Gilbert said he hopes other States will follow suit in the push for more affordable life insurance. “I’d be hopeful that this will send a strong signal and will act as a catalyst,” he said.
Gilbert said Australians, and Queenslanders in particular, are “woefully underinsured” and he pointed to TNS research that found only 4 per cent of average full-time workers in their mid 30s with dependants have the level of cover they need.
“Over 4,400 people with dependant children die in Australia each year and, for those without the financial support that life insurance provides, the burden is ultimately carried by other family members, social services, churches and other charitable organisations at a cost far outweighing the relatively minimal revenue collected,” he said.
“Certainly, we believe that Dr Flegg’s bill should be supported and the time has now come for each of the state and territory parliaments to draw up a timetable for the abolition of state taxes on these products so that life insurance is more affordable,” he said.