151211 Emergency services taxThe Baird Government’s proposed new state-wide emergency services tax will slug homeowners an extra $200 million a year to unfairly subsidise NSW businesses.

The government’s own 2012 discussion paper made it clear that these changes will cost homeowners an extra $200 million a year while delivering businesses over $250 million in tax cuts.

Baird’s big new tax will see residential property owners paying 75%  of the new tax while businesses and rural landowers pay less than 15% each. This is depsite the fact that businesses make up 55% of all emergency services call outs.

Greens MP and Emergency Services Spokesperson David Shoebridge said:

“This is the Baird Coalition government buddying up to the insurance industry, and whenever that happens ordinary people lose out.

“These changes will collectively cost NSW households, many of them already struggling, more than $200 million and every cent of this will go to Baird’s corporate mates.

“The Baird Government’s ‘biggest tax reform‘ will make the current system even more inequitable.

“There is a very rational reason to have the emergency levy paid on insurance premiums because well-run emergency services protect life and property and keep premiums low.

“Preventing and extinguishing fires, rescuing the injured and responding to disasters is core government work and must be provided to all regardless of their capacity to pay.

“It is a very poor reform that sees homeowners cross-subsidising businesses for the provision of emergency services.

“There’s nothing wrong the current system where business pay a reasonably fair share and the levy on the residential sector is linked to capacity to pay.

“There is an equity issue here. As a general rule those homeowners who can afford insurance are in a better financial position to pay a levy than those who can’t so when the levy becomes a universal tax it will inevitably hurt the less well off.

“If it was a good policy then the Coalition wouldn’t be launching it a few weeks before Christmas. Everyone knows this is the time that governments ‘put out the trash’ to try and hide bad news,“ Mr Shoebridge said.

Fast facts (all figures from the Government’s 2012 submission paper):

Who currently pays the insurance levy?

  1. 49% of the levy is paid by businesses
  2. 45% of the levy is paid by owners or occupiers of residential properties, and
  3. 6% of the levy is paid by owners or occupiers of rural properties.

Who uses the services? (the only reliable data is from Fire and Rescue NSW).

  1. 55% of callouts are to business properties
  2. 34% of callouts are to residential properties, and
  3. 7% of callouts are to rural properties.

If the broad-based property tax was on an ad valorum (sliding scale based on value of the property) rate then:

  1. 75% of the tax would be paid by owners or occupiers of residential properties
  2. 13% of the tax would be paid by businesses, and
  3. 12% of the tax would be paid by owners or occupiers of rural properties.

Replacing the existing insurance levy with an ad valorum property tax would[1]:

  1. Reduce the contribution by businesses from $342 million pa to $91 million per annum,
  2. Increase the contribution from homeowners from $315 million pa to $525m per annum
  3. Increase the contribution from rural landowners from $49 million pa to $84 million pa

[1] Based on the 2011/12 budgeted figures

Our submission to the original proposal in September 2012 is available here.