THE Victorian Farmers Federation has welcomed the State Government’s announcement that it will scrap the current Fire Services Levy for a new property-based tax.
The decision has been made in line with the recommendations made by the 2009 Royal Commission report into the Black Saturday bushfires.
The changes will not come into effect until July 1 next year.
Under the current system the Fire Services Levy is paid by property owners as part of their insurance premiums.
This, according to Victorian Farmers Federation president Peter Tuohey, has led to farmers being charged 90 to 95 per cent more on their premiums, not including the addition costs of stamp duty and GST.
He said this led to many people not insuring, or under insuring, their properties.
The Fire Services Levy is the method by which the State Government raises funds to support the CFA and the Metropolitan Fire Brigade.
Yet, under the current system, only those who have insurance pay the levy even though it is a service that everyone has access to.
Under the proposed changes all property owners will be required to pay this levy, whether insured or not.
Insurance brokers claim the changes will make insurance more affordable for everyone.
While Mr Tuohey applauds the government’s decision for a fairer tax, he expects it to come with a strong voter backlash. He said people were never happy when they had to pay for something they were accustomed to getting for free.
The new tax will be based on the capital improved value on each property, with a fixed base rate of $100 for residential properties and $200 for commercial properties, to be paid in the same manner as council rates.
And, according to the State Government, it will not be subject to GST or stamp duty, avoiding the tax-on-tax problem currently faced by people paying the levy as part of their insurance premiums.
Pensioners and veterans will get $50 concessions to this new tax, at a State Government cost of $20 million.
Mr Tuohey worries, despite his support, that the new tax will mean a decrease in funding for the CFA and MFB.
He hopes the government can get the balance right when defining and targeting areas of high fire risk.
Under the current system there is no standardised method for determining the Fire Services Levy, with insurance companies basing the charges on the risk of fire and not the value of properties. This has meant big discrepancies for people depending on whether or not they are categorised as living within a CFA or MFB area, which could differ between insurers.
Despite the government’s claims that the average contribution for households living within CFA areas will drop from $260 to $140 and the average MFB area contribution will drop from $195 to $145, Mr Tuohey still expects that people living in regional areas will be taxed more.