Scrapping insurance taxes favoured
Specific taxes on insurance deserve to be abolished, the Henry tax review concluded - not that there is any sign of the federal or state governments taking notice of this in the short term.The review proposed that insurance be subject to a broad-based consumption tax only, as indeed it already is.The review listed 32 insurance taxes levied at state level, drawing on research from NSW Treasury.The review noted that the rate and incidence of insurance taxes (all of which are levied at the state level) are quite high in Australia (being higher than nine other OECD countries, at least back in 2006). One obstacle to reform is that, thanks to the rise in the level of insurance premiums over the last decade, the percentage of state government tax revenue from insurance has roughly doubled over the last decade.The review proposed that one of the 32 taxes - the fire services levy used to fund metropolitan and bush fire brigades - could be replaced by a specific land tax tied to the risk of (bush) fire.However, the review also proposed local governments have more leeway to set the level of property rates that apply in their council are (something overseen to some degree by all state governments).