Liberals weigh up deficit levy
Hints: Treasurer Joe Hockey. Picture: Getty Images

Australians face paying up to 1.5 per cent more tax from July 1 if the Abbott Government goes ahead with a proposed "deficit levy" on top of the scheduled increase to the Medicare levy.

Federal Cabinet will decide next week whether to accept a recommendation from the Commission of Audit to drag the Budget closer to surplus by hitting workers with extra tax for the next two years.

It is understood one option is to model the deficit levy after the Gillard government's flood levy, which taxed earnings of more than $50,000 by an extra 0.5 per cent tax and all earnings over $100,000 by an extra one per cent.

This would generate more than $1.8 billion a year and be phased out before the Federal election in 2016.

A 0.5 percentage point increase to the Medicare levy is already locked in for July 1 to pay for the national disability insurance scheme.

DELOITTE WARY OF SOFTLY-SOFTLY BUDGET

Tony Abbott, who promised before the election not to increase taxes, yesterday refused to rule out the deficit levy and instead suggested the Government's overriding responsibility was to get the Budget back in the black.

But in a speech today, the Prime Minister will tell Australians that "everyone needs to be involved in fixing Labor's debt mess if all of us are to prosper in the years ahead" while arguing the Budget will be "for the country" and not for the rich or poor.

With the May 13 Budget expected to lift the pension age to 70, tighten eligibility for the disability support pension and phase out Family Tax Benefit Part B, Mr Abbott said it increased productivity and participation.

"For older people, people with disabilities or women with young children, our aim is to maximise everyone's ability to contribute to a better Australia. It's about driving change, but even more about empowering choice," his speech notes say.

"This Budget is about shifting our focus from entitlement to enterprise; from welfare to work; from handout to hand-up; from our own short-term anxieties to our nation's long-term opportunities."

In Opposition, Mr Abbott railed against Labor's taxes, saying that "no government taxed its way to prosperity" and that the coalition was "about getting rid of taxes, not imposing new taxes".

Shadow treasurer Chris Bowen said that if the Government introduced a new tax, it would be the "biggest breach of all". "If you are introducing a new tax, then it's a breach of Tony Abbott's promise of no new taxes," Mr Bowen said.

"If Tony Abbott wants to allege that a levy or a tax on Australian families is not a new tax, I would like to see him do that."

Government insiders said Treasurer Joe Hockey had hinted at the levy when speaking to Melbourne radio host Neil Mitchell last week.

"Everyone will be making a contribution, Neil, everyone, even radio hosts," Mr Hockey said.

The West Australian

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