here is the latest on the hypothetical tax
INCREASING taxes to pay for the huge flood damage bill is a "dumb idea" when Australians are already struggling with flood-related price rises, the Coalition says.
Julia Gillard is set to announce tomorrow that Australians will pay a one-off levy to raise $3.5 billion for the flood recovery. It is understood the favoured option is to increase the existing 1.5 per cent Medicare Levy.
However, Joe Hockey, the Opposition Treasury spokesman, said it was absurd that the Prime Minister was asking Australians to donate to the flood relief fund and planning to raise taxes, The Australian reports.
"What's even worse is that flood victims will have to pay this levy, they have been affected by the floods and then they are now going to have to pay the levy," he said.
Ms Gillard and senior ministers, including her deputy and Treasurer Wayne Swan, Infrastructure Minister Anthony Albanese and Finance Minister Penny Wong, met yesterday to sign off on the new levy.
While government sources remain tight-lipped about the level of any increase, it is understood ministers are keen to keep the rise as small as possible and for it to be accompanied by significant savings from scrapping or deferring billions of dollars worth of spending proposals.
One suggestion is that the increase would be 0.5 per cent or less, which would take the current Medicare Levy to 2 per cent or below.
If it was 0.5 per cent, it would cost an average salary earner about $5 a week and give the Government just under $3.5 billion in a full year to be spent on rebuilding damaged infrastructure, such as roads, bridges, rail and other essential community amenities.
Applying the increase to the Medicare Levy would mean single taxpayers earning less than $18,488 and couples on $31,196 would be exempt. Each dependent child or student would add $2865 to the threshold.
Mr Swan yesterday made his most forceful case yet for a levy, saying: "The only responsible thing to do is to have all options on the table."
He also said cutting spending could only provide so much.
"In responding to this crisis . . . we will have to make further savings but I don't think the Australian people would want us to respond by hacking into essential expenditure in health or education, sacking teachers or nurses," he said.
Mr Swan said the Government was determined to return the federal Budget to surplus as soon as economic growth returned to normal levels and this was not "some vague objective", but rather "the responsible thing to do".
While the Government expects general community support for a levy, especially in those states hardest hit by the floods, ministers are ready for a fierce political battle with the Opposition, which has been ramping up its rhetoric against "another great big new tax".
Opposition Leader Tony Abbott said the flood costs could be funded by cutting fat in the system, such as scrapping the "cash for clunkers" car scheme, redirecting remaining stimulus money and taking money out of the funds for the National Broadband Network.
Mr Swan criticised the Opposition for "playing politics", which he said the country could not afford.
He said any decision would be discussed with the Opposition and other parties and Independents in Parliament.
"When the Government takes its decisions we will naturally consult with all of the parties in the Parliament, we'll put it forward and we'll have hopefully a very productive and intelligent discussion about what the options before us are."
Already the bitching begins (if you read the comments). Blah blah blah blah blah. What, can't they afford $5 a week? And since I am in a higher income group I will be slugged more, but whatever. We are a Federation so we have to support those who have been hit. Oh, I already donated $200 to the flood victims. So the whiners who aren't affected by the floods can STFU. Maybe if they budgeted better they won't be struggling with an extra $5 a week. My god, the sky is falling.
Now if the coalition was interested in cutting spending, I suggest they get rid of the coalition inspired Baby Bonus which cost us
$1.16 billion a few years ago when the payments were less. But they won't, because we should only cut spending on things the Coalition doesn't like.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.