High Taxes Blamed For Lack Of Fire Insurance In Australia

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

07 January 2002

The Insurance Council of Australia has pointed to a possible link between high taxes in New South Wales, which is currently battling the still-raging bushfires, and the relatively low take-up rates for fire insurance in the region.

According to the industry body, following the 1994 Sydney bushfires it was discovered that one in five houses destroyed by the fires was not insured. An ICA spokesman, speaking last week, observed that this may have a lot to do with the premium tax rates on policies in the state, which are among the highest in the world due to a combination of the fire services levy, GST, and stamp duty.

The spokesman told journalists that the ICA would wait until the fires had subsided and the extent of under-insurance had been assessed before making further comment.

Meanwhile, the NSW Chamber of Commerce has pleaded for a temporary exemption from state taxes for businesses affected by the bushfires. Margy Osmond, the Chamber's Chief Executive revealed, however, that the effects may not be limited to those businesses which have suffered physical damage.

'Some of them have been forced to close their business because they have no power or water. Or they may be without staff because the staff are out fighting the fire on the front lines,' she commented last week, speculating on the extent of the damage.

'We could be facing a rash of business failures.'

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