Fire Services Levy Included In Australia's Henry Tax Review

by Mary Swire, Tax-News.com, Hong Kong

05 August 2009

Victoria’s Fire Services Levy (FSL) is being included within Australia’s Henry review of the country’s tax system. This follows pressure from within the state to examine whether the FSL is an appropriate measure to fund the emergency services.

The FSL, as the Emergency Services Levy in other states such as Western and South Australia, is levied on insurance premiums and is normally calculated as a fixed charge plus a variable amount dependent on the capital value of the property, the area in which it is situated and the type of land use, for example residential or industrial. The variable charge is meant to ensure that landowners pay a rate of levy commensurate with their notional use of the emergency service.

However, the combination of the FSL, General Sales Tax and stamp duty can add up to 50% to general insurance premiums in Victoria, while companies in the state are said to pay an additional 68%. It is thought that the high tax rates deter property owners from insuring altogether. An estimated one-third of the properties involved in fires this year were uninsured. That, in effect, means that people and companies that have taken out insurance have subsidised those who have not.

The Australian Treasury has now agreed that the Henry review will look at these kinds of taxes as part of its review of Australia's tax system.

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