Insurance prices may drop

[Nickxb]

i found this article in the news.

It is about time we got a break from the government.



"FEDERAL Treasurer Peter Costello has called on state governments to cut taxes on insurance policies, saying they are causing the less well off to under-insure their cars and homes.

In a strong attack on the states' financial management, Mr Costello said the states were reaping more money than ever but were racking up huge levels of debt.

He also criticised them for failing to scrap state taxes in return for GST revenues despite agreeing to do so seven years ago.

Mr Costello singled out insurance tax, saying added taxes and charges made up as much as 70 per cent of the cost of the risk premium in Victoria.

"I recommend to my state colleagues to look very closely at insurance tax,'' Mr Costello told the Menzies Research Centre's state policy conference.

"The cost of insurance is leading poorer people to under-insure and expose themselves to risk.

"The taxes on insurance fall heavily on those who can least afford to bear the risk.''

The Treasurer also called on the states to cut stamp duty on property, saying the thresholds had not moved in line with inflation.

"Had the states indexed thresholds to inflation from 1996-97, stamp duty on the median house would be four per cent or almost $450 lower in Brisbane, seven per cent or around $1300 lower in Sydney, and 24 per cent or almost $4900 lower in Perth,'' he said.

Mr Costello said state revenues had grown by more than seven per cent a year since the GST was introduced in 2000, yet the states were going into debt by borrowing to build long-neglected infrastructure like roads and dams.

In a separate report presented to the conference, economist Henry Ergas said the states were spending more on services, especially health, education and policing.

But Dr Ergas said a large proportion of the increased spending had simply gone to funding higher wages and salaries for public servants.

"There is not widespread evidence that increased spending on government services has generally led to comparable increases in output per person or more effective service delivery,'' he said. "