Advertisement

Levy assault on hip pockets

Plans flagged: Prime Minister Tony Abbott. Picture: AAP

West Australians are facing the biggest assault on their hip pockets by a Government in a generation in a move that threatens to leave an average family thousands of dollars a year worse off.

A possible "deficit levy", on top of an already scheduled increase in the Medicare levy to cover the cost of the National Disability Insurance Scheme, would more than offset any benefits that might flow from repealing the carbon tax.

It would come on top of measures being considered to wind back handouts to low and middle-class families and plans flagged by Prime Minister Tony Abbott to target welfare, including the age pension.

From July 1 this year, the Medicare levy will be increased 0.5 percentage points as part of the NDIS. The measure was supported by the ALP and the coalition.

The move will add about $500 to the annual tax bill of someone earning $100,000 a year.

A deficit tax, either one which started abruptly at $100,000 or was phased in from $50,000, would add much more to a person's overall tax bill.

A person on $200,000, who would gain $951 from abolishing carbon price, could lose up to $4000 a year under the debt tax proposal.

Once the increase in the Medicare levy to cover the NDIS is factored in, they would be $5000 worse off.

Someone earning just over $100,000 annually, who took a $528 hit with higher bills under the carbon tax, would go backwards by up to $1500.

Although Mr Abbott labelled the mining tax as "anti-West Australian", a debt tax would disproportionately hit the State because it has the highest wages in the nation.

Apart from a deficit tax, the Government has made clear it will target family handouts. Up to 130,000 WA families receiving Family Tax Benefit B could also be worse off with suggestions the Government may scrap the payment, which costs taxpayers $4.7 billion a year.

FTB-B is worth up to $4172 a year and paid to families with a stay-at-home parent as long as the main breadwinner earns less than $150,000.

But more likely according to welfare expert Professor Peter Whiteford is slashing the means test to Mr Abbott's newly nominated figure of $100,000. That would affect about 95,000 families nationally and save the Budget $200-$300 million a year, he said.

The Australian National University academic said it was hard to find major savings in the family payments system because it was already tightly means tested.

"Two hundred million dollars sounds like a lot of money but it's not a lot in the scale of future deficits," he said.

Family Tax Benefit A - which is claimed by 135,000 households in WA - could also have its means test wound back to $100,000. A family with three primary school-aged children can earn up to $130,000 a year and still claim the payment.

Residents of Perth's less well-off suburbs will be hit hardest by a $6 co-payment for bulk-billed visits to the doctor.

In the seat of Brand, which takes in Perth's industrial southern coastal suburbs, the bulk-billing rate was 82.2 per cent. In Curtin, which covers the wealthy western suburbs, 57 per cent of visits were bulk-billed.

CommSec chief economist Craig James said the debate over ways the Government may repair the Budget could hurt the overall economy.

"The risk is that the rhetoric of austerity could prove too negative, causing consumers to again trim spending," he said.