Medicare levy increase falls flat

Posted: 26 April 2018 2:30 pm

The government claims it's found the money it needs to fund the National Disability Insurance Scheme without resorting to a tax hike.

The Turnbull government has decided to scrap its proposed increase to the Medicare levy, saving Australians anywhere from $120-$875 per year.

The government proposed the 0.5% increase when drafting its 2017 budget, and it was originally slated to affect Australians in nearly every tax bracket. This prompted fierce opposition from Labor which proposed their own version that would apply to only those making above $87,000 per year.

After much back-and-forth, both plans were finally discarded altogether.

The purpose of the tax was to fund a $57 billion shortfall in funding to the National Disability Insurance Scheme (NDIS). Treasurer Scott Morrison says economic growth and better-than-expected tax revenue has allowed the government to fully fund the NDIS.

The recent news caught many by surprise, including disability organisations who aren’t convinced funding for the NDIS is as secure as Mr Morrison says it is. Some also believe the move is designed to make it easier for the government to explain tax cuts that are expected in this year’s budget.

When he first announced the Medicare levy increase last year, Mr Morrison made an emotional appeal to Australians by invoking the plight of his brother-in-law Gary who suffers from multiple sclerosis. Morrison now says Gary is happy with the new decision and trusts that the NDIS will have the funding it needs.

The Medicare levy is a flat 2% tax levied on most Australians to help fund Medicare. Only those making below $27,000 are exempt from paying the tax.

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