A doctoral thesis on the insurance industry had brought home the taxation burden that insureds in Australia were bearing, according to Dr Allan Manning, who has just launched the dedicated website NoTaxOnInsurance.com.au .
As part of his study he compared the level of taxation on general insurance in various Australian states to other parts of the world. “This really brought home to me the extent of the taxation burden being borne by the prudent and conservative in the community,” he says on his website.
He gave the following example. “A resident of rural Victoria wishes to be a good member of the community. He joins the Country Fire Authority as a volunteer and gives up his weekends and is on 24-hour callout to offer protection to his or her community.
“This citizen owns a house and runs a small business and insurers their home and contents as well as their business assets.
For every dollar this person pays to the insurer, up to 86 cents goes to the government of which over 14 cents is tax on tax.
“Next door to this model citizen is someone who is not a member of the brigade and who decides not to insure. This neighbor avoids all the taxation.
“If both homes are threatened by fire, both receive exactly the same fire protection from the CFA, yet one has funded it and the other not. I ask you is this fair?
“Compare this level of taxation with a resident in California, reputedly a state that has the highest incidence of fire in the world. A resident there pays 2.4% taxation on their insurance.”
He decided on a grassroots campaign when he found governments saying “there were not votes in it” for business survival and the reinstatement of families’ lifestyles if they are unfortunate enough to have their home and/or contents destroyed by fire, storm or the like.
The industry bodies the Insurance Council of Australia and the National Insurance Brokers Association have lobbied successive governments for many years and have had success in Queensland, South Australia and Western Australia in having the fire service levy removed from insurance policies.
The Northern Territory and ACT meet the cost of fire services from consolidated revenue like other states fund the police.
This initiative is not designed to compete with theirs but complement it by educating the public and allowing those that chose to do so to register their desire for change on this issue, Dr Manning said.
The simple fact that the level of taxation results in fewer people insuring and many more not insuring adequately and this in turn puts businesses, workers jobs and the financial security of Australian citizens in jeopardy should be enough for politicians, he said.
“Regrettably it is not,” he said and so launched his NoTaxOnInsurance.com.au website .
We would like to thank Insurance News Australia for permission to reproduce this article.