Federal Treasurer Scott Morrison has dumped plans for a 0.5 per cent hike in the Medicare Levy from next year to fill Labor’s $57 billion funding shortfall for the National Disability Insurance Scheme, claiming that a stronger economy had delivered an unexpected budget revenue windfall that would now entirely cover the cost of the scheme.
Australian Conservatives leader Cory Bernardi has welcomed the move saying he was right to criticise this Big New Tax in his reply to last May's budget in which he said:
"I consider it quite callous, quite calculating and very political that this government is appealing to people's patriotism and their sense of moral obligation by pegging this insidious new insurance tax to the NDIS. I predict today that the NDIS will never, ever be fully funded. The NDIS will be exploited. It will be rorted. In fact, it is already being rorted, and no amount of money will stop those rorts. There has to be a better way."
The Australian newspaper reports the move, outlined in a pre-budget speech to the Australian Business Economists in Sydney today, will spare workers and their families from an added annual tax bill scheduled to start in July 2019 of between $100 for low income earners and almost $1250 at the higher end of the scale.
The Treasurer says the Government will no longer proceed with the $8 billion levy hike claiming that the budget would now be able to absorb the full cost of the scheme which had been left unfunded over the longer term by the former Gillard and Rudd governments when Labor lost office in 2013.
“As we prepared the budget it was clear that we no longer had to do this and so I’m pleased as punch that we don’t,” Mr Morrison told the Nine Network this morning. “I’m pleased as punch for people with disabilities that we can guarantee those funds from a stronger economy.”
The better than forecast revenue projections, which it is understood will extend the $10 billion extra forecast in financial updates released last month, will provide a significant cash boost to the budget.
In his budget reply speech last year, Senator Bernardi called the Medicare Levy tax hike one of three Big New Taxes brought in by the Coalition in their Fifty Shades of Labor Budget.
He said, "Thankfully, common sense prevailed today and the Coalition abandoned the Insurance Tax".
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