Lack of concessions on insurance products a big disappointment according to DeloitteDOWNLOAD
Sunday 2 May 2010: “The insurance industry and the Australian public will be disappointed that the Government has not taken up Henry’s recommendation to abolish all specific taxes on insurance products,” said Phil Lee, Deloitte Insurance Tax partner.
“The real disappointment is that Henry recognised how Australian insurance taxes are leading to under-insurance or non-insurance, but the Government has not made a response to Henry’s recommendation. It seems they only barely acknowledged that insurance taxes are amongst the most inefficient taxes levied in Australia,” he said.
Lead Deloitte Insurance Tax partner, John Giannakopoulos said: “Henry recognised the important role that insurance plays in enabling transactions and encouraging the productive use of resources. Without adequate risk management strategies provided by insurance such transactions might not have taken place. Access to insurance enables greater opportunities and flexibility for people and business. High premiums due to compounding taxes and levies actually distort consumer behaviour.”
Henry recommended that all specific taxes on insurance products, including the fire services levy, should be abolished and that insurance products should be treated like most other services consumed within Australia and be subject to only one broad-based tax on consumption.
“Ken Henry’s findings on insurance are findings that all Australians already know,” said Giannakopoulos. “Insurance products tax of upwards of 30% in New South Wales and Victoria are so high compared with about 5% in the UK, and even lower in California and Japan, that our industry becomes inefficient and inequitable.”
The reality is, that the Government has neither strengthened, simplified, nor made the insurance industry fairer. We believe it is a real missed opportunity,” said Lee.