BUDGET: CSU’s Associate Professor in Political Science Dominic O’Sullivan thinks the May 13 budget will be very unpopular.Photo: supplied. 043014domA DEFICIT levy on higher income earners would go against the coalition’s pre-election policies, according to CSU’s Associate Professor in Political Science Dominic O’Sullivan.
Prime Minister Tony Abbott has not ruled out a debt tax on higher income earners in the May 13 budget, arguing it would not be a broken pre-election promise as it would be a temporary measure.
Under the deficit levy, workers earning more than $80,000 would be slugged an extra one per cent tax for the next four years, while those on incomes above $180,000 would pay an extra two per cent.
Associate Professor O’Sullivan said the deficit tax would go against the anti-tax stance Mr Abbott took before the election.
“It is not philosophically in line with the position he took when he was in Opposition, ” he said.
Assoc. Prof. O’Sullivan said when they were in Opposition, the Abbott Government had criticised the Labor government for its ‘great big taxes’ like the Queensland flood levy and had promised not to introduce any new taxes.
“The Liberal Party is not a party of big tax. When it was last in Opposition that was a point of difference it tried to make between itself and the ALP,” he said. “While a temporary tax may not be a broken promise, it is certainly not consistent with the Liberal Party line.”
However, he said without the deficit levy, the government could have left themselves open to accusations of class warfare, as they would mainly be getting funds by cutting services which assist low income earners.
Assoc. Prof. O’Sullivan said that by imposing the levy on those earning more than $80,000 the budget would impact both high and low income earners.
“The tax bracket the levy is applied to has got to be low enough to raise the money they want to, but not so low that it impacts on low income families already impacted by cuts to benefits and services,” he said.
Assoc. Prof. O’Sullivan said he expected questions would be raised about why the government would choose to increase taxes and not scale back the $5.5 billion paid parental leave scheme.
“If they didn’t have policies such as that, perhaps they wouldn’t need to increase taxes and make other cuts,” he said.
Assoc. Prof. O’Sullivan said if the deficit levy were to go ahead and was combined with the introduction of a GP co-payment and increasing the pension age, it would make for an unpopular budget.
He said the Coalition had essentially won the election on their promise to balance the budget more quickly than the ALP.
“This does show that they are serious about swiftly fixing the deficit and are willing to make unpopular decision to do so,” he said. “Whether or not our debt is quite as urgent as our government is proposing, they are keen to address it in this budget, even if it is not particularly large when compared with other economies internationally.”
He said while the public had voted for the idea of a balanced budget, many would not support the reality of one.
“People like the idea of a balanced budget, but when they realise it might mean more tax for them or lowering the threshold of the likes of the family tax benefit, they are not so keen on the idea,” he said.
This story Administrator ready to work first appeared on Nanjing Night Net.