Replace inefficient insurance taxes: ICA
A more efficient tax base will boost the national economy by more than half a billion dollars, the Insurance Council of Australia (ICA) believes.
This boost would be possible if state and territory governments replaced inefficient stamp duties on insurance policies, according to research by Deloitte Access Economics for the ICA.
The research examined the impact of replacing the taxes with a commensurate rise in land taxes, such as council rates.
Though the changes were designed to be revenue neutral, moving to a more efficient tax base boosted economic activity, will result in the overall tax intake actually increasing.
ICA chief executive, Rob Whelan said their modelling found a significant rise in both household consumption and government revenue when governments implement this financial reform.
"Household spending rose in every state and territory once insurance levies were replaced by more efficient taxes, leading to an increased tax intake for governments," he said.
The economic activity increase would lead to an overall rise in tax revenue across all state and territory governments of $575 million after five years.
"The Baird Government could reap an extra $400 million by implementing a reform that's long been advocated by independent inquiries, as well as the participants at last month's National Reform Summit," Whelan said.
"The ACT Government could raise an additional 2.24 per cent in tax revenue, while South Australia and Victoria would gain about 0.5 per cent — significant yields in the context of a state or territory budget."
In New South Wales, there would be more than $3 billion in extra consumption over five years, followed by Victoria ($1.08 billion), Queensland ($582 million), South Australia ($298 million), and Western Australia ($263 million).
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