How will the National Debt Tax affect you?



News Corp reported that the national debt tax (also known as the deficit tax) is a strategic move by the Abbott Government to ensure that the deficit can be taken under control. It is rumoured to operate exactly like the Medicare Levy, it is believed that users earning over $80,000 a year will be slogged with a 1% tax, and individuals earning over $180,000 a year with a 2% tax. 

Individuals earning $80,000 a year will pay $800 a year extra, and individuals earning over $400,000 will be paying an extra $8000 a year.

On Monday opposition leader Bill Shorten accused Tony Abbott on reneging on elections promises. He continued to say, that they have doubled the deficit since taking office and now they “want all Australians to pay the deficit tax”.

The Australian Financial Review reported that many high profile business and industry leaders are urging against this tax. Agreeing with those comments was the head of the Australian Chamber of Commerce and Industry Chief operating officer John Osborn. He was quoted on saying on ABC radio “The government promised no surprises and new taxes and a debt levy would be an unwelcome surprise.”

Treasurer Joe Hockey is due to release the Commission of Audit report on Thursday, it is expected that the report will reveal measures to restrict the deficit rising to the expected $30 billion figure by 2017-2018 year.

In a speech to the Sydney Institute on Monday night, Abbott said that there wouldn’t be many people “without a grumble” when the government hands down the budget on May 13. The speech also signalled a number of interesting reforms and changes (or lack thereof):

  • Families on $100,000 and more to see tax alterations
  • Welfare payments to undergo indexing and eligibility threshold adjustments
  • Income tax cuts likely in four or five years’ time
  • ‘‘Biggest-ever’’ national roads program (potentially including the East West Link)
  • Scrapping of the school kids bonus, income support bonus
  • No cuts to age pension or hike in access age before 2017

What are your thoughts on the “deficit tax”? Let us know in the comment section below.

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