Study Bolsters Call to Eliminate Insurance Taxes

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The findings reveal that stamp duties and insurance taxes are particularly detrimental to the economy, even when applied at minimal rates. The researchers concluded that these taxes are fundamentally inefficient and should be completely removed, a sentiment they shared in their article in The Conversation. Insurance duties, which currently contribute approximately 0.3% of Australia’s GDP, generate about 38.5 cents of economic loss for every dollar raised. When these duties were reduced to generate just 0.01% of GDP, the economic loss only slightly declined to 31 cents per dollar raised.

In comparison, the study found that personal income tax and GST displayed greater economic efficiency and continued to perform better relative to their share of GDP increases. The researchers argue that taxes such as stamp duty and insurance duty are inefficient at any level due to their narrow bases and behavioural distortion effects. Specifically, they discourage individuals from obtaining insurance, thereby rendering these taxes ineffective as revenue-generating mechanisms, even on a modest scale.

This research holds significant implications for Australian taxpayers, businesses, and policymakers. The inefficiency of stamp duties and insurance taxes highlights the potential for economic improvement through tax reform. Eliminating these taxes could lead to increased insurance uptake and reduced economic distortion, enhancing overall economic productivity. Such changes could benefit consumers through potentially lower insurance costs and spur economic activity by removing barriers to efficient resource allocation.

These findings are timely as the federal government's economic roundtable approaches, scheduled to take place in Canberra from August 19-21. Tax reform and budget sustainability will be key topics of discussion. The insights from the Victoria University study could influence policymakers as they consider strategies to enhance Australia’s tax system. By focusing on eliminating inefficient taxes, there is an opportunity to create a more equitable and effective tax framework that supports economic growth.

Published:Thursday, 7th Aug 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

HESTA Announces Reduction in Insurance Fees to Benefit Members

11 May 2026: Paige Estritori

HESTA, a prominent Australian superannuation fund, has unveiled a significant reduction in insurance fees, set to take effect from 1 July 2026. This initiative aims to make insurance coverage more accessible and affordable for its members, aligning with the fund's commitment to enhancing member benefits. - read more

Hostplus and MetLife Australia Extend Partnership to Enhance Member Insurance Benefits

11 May 2026: Paige Estritori

Hostplus, a leading Australian superannuation fund, has announced the extension of its group insurance partnership with MetLife Australia until June 2028. This strategic move aims to elevate the servicing models across claims and underwriting, ultimately delivering stronger outcomes for Hostplus members. - read more

NEOS Elevates Income Protection with Increased Medical-Free Limits

03 May 2026: Paige Estritori

NEOS has recently announced significant enhancements to its income protection offerings, effective from 11 March 2026. Responding to adviser feedback, the insurer has increased the maximum coverage available without mandatory medical examinations, aiming to simplify the application process for Australians seeking income protection insurance. - read more

Acenda Life Enhances Income Protection Policies with Increased Coverage Limits

03 May 2026: Paige Estritori

Acenda Life has recently implemented a series of updates to its Retail Life Insurance portfolio, effective from 11 April 2026. These changes are designed to provide greater flexibility and accessibility for Australians seeking income protection insurance, addressing common concerns about policy limitations and entry age restrictions. - read more

AFCA Supports Insurer's Application of Offset Clause in Income Protection Claim

03 May 2026: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has recently ruled in favour of Nippon Life Insurance in a dispute concerning the application of an offset clause in an income protection (IP) claim. This decision underscores the critical importance of policyholders understanding the specific terms and conditions of their insurance policies. - read more

AustralianSuper Announces Substantial Insurance Premium Increases

25 Apr 2026: Paige Estritori

AustralianSuper, the nation's largest superannuation fund, has informed its members of impending increases in insurance premiums, set to take effect from May 30, 2026. This development is particularly noteworthy for those holding life, total and permanent disability (TPD), and income protection insurance through their superannuation accounts. - read more

Click for more Insurance News