Fire services tax on policies may leave property underinsured if tragedy strikes.FARMERS fear a rise in the Fire Service Levy could lead to property owners refusing to insure assets.
The Victorian Farmers Federation said the increase in the Fire Services Levy highlights the inequity of the system and the importance for a transition to a new model, as the total tax on insurance soars above 123 per cent.
The current Fire Service Levy stands at 65 per cent for commercial properties in the CFA area, but is set to increase to 85 per cent within days.
VFF President Andrew Broad says the increase will push the total taxation on insurance to more than 123 per cent when GST and stamp duty are applied.
“This level of tax is obscene and will only lead to under-insurance or no insurance at all,” he said.
“The latest increase emphasises the need for the urgent transition to the new fire funding model,” he said.
“Farmers will now pay more in tax than the cost of the premium.
“At 85 per cent – plus GST and stamp duty – farmers will be left with a $1000 insurance premium which will cost them an excessive $2239.
“We’ve always maintained that the Fire Service Levy creates a disincentive to insure, and rewards those that fail to do so,” Mr Broad said.
“Unfortunately, there will be farmers who are renewing premiums and who are paying 20 per cent more because they renewed after the Fire Service Levy was increased.
“This is clearly unfair and highlights a need for a change in the system.
“We applaud the State Government to committing to a change in funding the fire services. The best way to fund emergency services would be to create a charge based on the building asset value of a property, as well as a small charge on motor vehicle registrations,” Mr Broad said.
