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Australia Mulling Tax On Top Earners

by Mary Swire,, Hong Kong

29 April 2014

Australian Prime Minister Tony Abbott has said that high earners should bear "a significant quantum of the burden when it comes to sorting out our problems," but failed to confirm whether a so-called deficit reduction levy will feature in the upcoming Budget.

During a round of interviews at the start of the week, Abbott made clear that "AUD123bn (USD114bn) worth of deficits and AUD667bn worth of debt" cannot be ignored. He told Radio 3AW that the Coalition is assessing a range of options that would enable it to sort out what he described as Labour's "debt mess," but said he wanted to ensure that no one section of society was disproportionately affected.

When quizzed by the presenter, Neil Mitchell, whether the option of a deficit reduction levy would represent a broken election promise, Abbott admitted that "if there was a permanent increase in taxation, that would certainly be inconsistent with the sort of things that were said before the election." He added that the Government wanted taxes to go down, not up, but warned that "when you're in a difficult position, sometimes there needs to be some short-term pain for permanent and lasting gain."

According to local media reports, the Budget could see the introduction of a one percent levy on all taxable income above AUD80,000 (USD74,200). Those earning over AUD180,000 could face a tax of 2 percent.

Abbott told a press conference in Melbourne recently that taxpayers "shouldn't assume that every decision has been made and the Budget is finalized," and said that a "whole range" of proposals would be considered in the two weeks leading up to the Budget.

Labour leader Bill Shorten has already attacked the prospective levy, labeling it a "deceit tax." He told reporters that it was "clear to most reasonable Australians that the Abbott Government said one thing in opposition and is now doing something else in government." The Greens have likewise refused to support any such scheme.

TAGS: tax | economics | budget | Australia | tax thresholds | tax rates | tax reform | individual income tax

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