Page 2614 - Week 07 - Tuesday, 5 June 2012
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Fairer because we are reducing taxes for those on lower incomes.
Simpler because we are removing some taxes and reforming others.
More efficient because we are reducing the distortions on household spending and business activity.
This plan is revenue neutral—the reforms are not about raising the overall amount of tax the Government receives.
Many taxes will reduce, some will rise, and several will be abolished.
The guiding principle has been that households who can least afford it should pay less, and those who can most afford it, should pay more. This is currently not the case with many of our taxes.
In addition, there will be concessions for some who fall outside the scope of tax reform.
Structural change of the scope and scale we are announcing needs a measured introduction. This is a plan for the first five years of what will be a 20-year process.
Insurance Taxes
Today I am announcing the abolition of all tax on insurance premiums.
Currently the ACT levies a 10 per cent tax on general insurances and a 5 per cent tax on life insurance. This tax makes insurance more expensive and creates a disincentive for people to insure.
Over the next five years we will abolish these taxes—starting from October this year, the tax will reduce by 20 per cent each year.
This means every family with home insurance, contents insurance and motor vehicle insurance will see a reduction in those costs.
Every business in the ACT will see a reduction in their business insurance.
Around one-third of households on the most modest incomes—those earning up to $30,000—do not have insurance. In contrast almost 100 per cent of households on the highest incomes do. This change will make insurance cheaper and more within the grasp of all households.
This tax cut will make a real difference to Canberrans.
A family with two working parents and two children, with two motor vehicles plus home and contents insurance and one or two life insurance policies will see a reduction in their out of pocket expenses.
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