28 January 2011

Australian Reconstruction Levy to be Borne by the Affluent

The Australian government announced its response to the estimated $5.6 billion cost of rebuilding flood-affected regions.

Funding will come from the following proposed sources:
  • A$2.8 billion in spending cuts, including removing industry assistance and cutting back other green programmes and making other cuts.
  • A$1.0 billion in delaying some infrastructure projects.
  • A$1.8 billion through a one-year levy on people earning over A$50,000.

The levy will be structured as follows:
  • Taxable income below A$50,000: exempt.
  • Portion of taxable income between A$50,000 and A$100,000: 0.5 per cent.
  • Portion of taxable income above A$100,000: 1.0 per cent.

Anyone affected by the floods is exempt.

The levy will wipe out more than half the tax cuts received in 2010-11 by anyone earning over A$100,000.

The burden of the levy (if approved by parliament) will fall on the affluent and the middle class.

There are no plans to raise the Goods and Services Tax.  Otherwise, even the poor have to pay the levy.

The median wage is estimated to exceed A$50,000.  The average full-time adult ordinary earnings in August 2010 were A$1,259.40 a week (reference: Australian Bureau of Statistics), or approximately A$65,600.

No comments:

Post a Comment