Increased Fire Service Tax

Increased Fire Service Tax on Insurance Policies

In New Zealand the firefighting services are funded by a tax called the Fire Service Levy.  This tax is added to the insurance premiums for personal and commercial property, motor vehicles, contract works and other insurance policies.

The Government is currently undertaking a consultation process that will result in a merger of the urban and rural firefighting services.  We support this merger because it is expected to not only bring about operational savings but also enable the fire service to better handle the broader types of emergency that have become their responsibility in recent years.

As an insurance buyer, how will these changes affect you?

The cost of merging the urban and rural firefighting services has been reported by Internal Affairs Minister Peter Dunne to be $303 million, $263 million of which will be funded through an increased tax on insurance policies.

To achieve the required funding the Government has announced a 40% increase for the tax on insurance policies, the Fire Service Levy, effecting policies from 1 July 2017. Generally that means households will pay an annual Fire Service Levy of $127, an extra $36 tax per year. Business owners will also be affected by these changes.

Are there any other proposed changes in the future?

Depending on the outcome of the current consultation process, the way the tax on insurance policies is calculated will probably change from December 2018. It is proposed that the tax will apply to more insurance policies and property types but the financial impact of these future changes will not be known until the consultation process is complete and the new legislation has been prepared.

We will continue to monitor these changes and will keep you informed when your insurance policy is going to be affected.

If you have any questions about these changes please do not hesitate to get in contact with us.