Shorten's budget reply targets top earners

Frederick Owens
May 12, 2017

Opposition Leader Bill Shorten has used his budget reply speech to call forthe tax to be limited to the top 20 per cent of Australian wage earners.

He said the Turnbull government's proposed Medicare levy hike would hit people earning as little as $21,000 and see a worker earning $55,000 pay an extra $275 per year.

The change would mean that taxpayers can not deduct more than $3000 in payments to lawyers or tax accountants for managing their tax affairs.

Labor argues the NDIS was fully funded when it was in government but the government argues there is a $56 billion shortfall in funding over 10 years.

He is, however, under pressure from the government to say if Labor will support a 0.5 per cent hike in the Medicare levy in two years' time, to help pay for the National Disability Insurance Scheme.

The Coalition want to increase the Medicare levy by 0.5 percentage points for nearly all Australians, which would equate to an extra $375 a year for those earning $75,000.

"Labor can not support making people on modest incomes give up more of their pay packet, especially when this budget goes out of its way to give taxpayer money to millionaires and multinationals", he said.

Labor wants to limit the increase to the top two tax brackets, so it only applies to people earning more than $87,000. Who's budget proposals do you like more?

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But he said Treasurer Scott Morrison and Prime Minister Malcolm Turnbull must bear the political consequences if banks pass the costs to customers.

Labor's leadership group was due to discuss the matter on Thursday and there are range of views over whether to proceed.

They're facing a backlash from the bankers over the surprise $6.2 billion levy on Australia's largest financial institutions.

Bill Shorten also announced Labor would cap the amount people can deduct for the management of their tax affairs at $3000 in a bid to stop people exploiting holes in the tax net. Although affecting only one in 100 taxpayers, this would save $1.3 billion over the medium term.

But the analysis from Deloitte shows that while millionaire taxpayers - those earning more than $1 million a year - comprise just 0.4 per cent of all Australian taxpayers, those taxpayers would contribute 7 per cent of the extra Medicare levy.

Finance Minister Mathias Cormann said he wouldn't be drawn into a debate on "semantics".

He said Labor's numbers did not add up and it would put the triple A credit rating at risk.

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