The slight reduction in the rate of stamp duty levied on base insurance premiums in yesterday's state Budget is a "step in the right direction", but has failed to address the high rate of taxation charged on insurance, according to the Insurance Council of Australia (ICA).
Regional manager Graham Jones says he is disappointed the Queensland government refuses to adopt the recommendations of the inquiry into the collapse of HIH Insurance and abolish stamp duty on insurance premiums altogether.
The government's 0.1 percentage point cut in the rate of stamp duty - from 8.5% to 7.5% effective August 1, 2004 - will save policyholders just $1.10 on a $100 base premium.
Jones says applying stamp duty on the GST-inclusive premium is still a "tax on a tax".
"On $100, $19.35 was payable in taxes (GST plus stamp duty), and now it is [$18.25]," he notes.
"The alternative for the government, instead of collecting a tax on a tax, if they say stamp duty is one of the few ways [states] can collect income, is that they could at least charge stamp duty on the premiums paid to insurance companies - that is, $100 instead of $110."
Despite the move, Jones says the ICA will take "every opportunity" to lobby for further changes to the taxation of insurance premiums.
"Sure the government has removed stamp duty on public liability insurance for not-for-profit organisations, but that fact remains that the government has done better out of increases in insurance premiums by virtue of the increase in stamp duty [collections]," he says.
Yesterday's Budget also included the abolition of credit card duty from August 1, 2004 and the previously announced removal of bank accounts debit (BAD) tax from July 1, 2005.