The levy is now part of a package of tough measures under consideration that include scaling back benefits for families earning more than $100,000 a year and charging more fees for bulk-billed visits to doctors.
NATSEM estimates that putting a cap on family benefits for families with a combined income of $100,000 would hit a further 280,000 families and save $1.1bn.
NATSEM principal research fellow Ben Phillips said loss of the benefit would cost these families an average of $3900 a year and be particularly harsh on larger families. With Tony Abbott stating that no tax cuts are likely for another four or five years, the government will also be relying on inflation pushing an increasing share of all salaries and wages into higher tax brackets.
The failure to adjust tax thresholds will be costing individual taxpayers an additional $3bn each year, according to calculations by Deloitte Access Economics. The added burden is cumulative so that by 2017-18, taxpayers will be paying $15bn more in income tax than they would if the Abbott government was adjusting the tax thresholds for inflation.
This still leaves a substantial gap to be filled by spending cuts, with the Audit Commission warning that the deficit — forecast to be $33.9bn in 2014-15 — would still be above $30bn in 2017-18 in the absence of corrective action.
While the details of the deficit levy are yet to be finalised, it is expected to amount to 1 per cent on incomes over $80,000 and 2 per cent on incomes over $180,000.
Within the government the tax measure is seen as the only way to ensure the pain in the May 13 budget is spread evenly to those on higher incomes, given that cuts to benefits leave richer Australians unscathed.
Labor, the Greens and smaller parties have all declared their opposition to the levy.
I’m rather ambivalent about this on one hand I can see the necessity but I wonder about the politics if this actually comes to pass . Because we should all remember that this idea could still end up being far less onerous than it currently seems simply because what is mooted now may be in excess of what is actually in the coming budget. Good to se that the PPL scheme is having its threshold lowered from 150K to 100K though.
Interestingly as the Labor Party and the Greens historically advocate for higher taxes for the rich its amusing to see them having kittens about what is an impost mainly on the rich…
on the other hand some of may conservative friends are understandably upset about any tax increases .
Anyway what do readers think about all of this budget speculation?