Prime Minister Tony Abbott won’t confirm whether a new debt levy is on the budget table but insists a temporary tax hike wouldn’t be a broken promise.
Workers earning more than $80,000 could reportedly be slugged an extra one per cent tax for the next four years as part of the government’s bid to plug the deficit.
Those on incomes above $180,000 could pay an extra two per cent.
But asked to confirm the government would introduce the levy in the May budget Mr Abbott would only say the government was looking at a range of options to sort out the “debt mess”.
Mr Abbott pointed out Australia faced $123 billion in deficit and $667 billion in debt.
“$25,000 per man, woman and child,” he told Fairfax Radio on Tuesday.
“It cannot be ignored. Debts at that level, they control you.”
But Mr Abbott denied a temporary levy would break his pre-election promise not to introduce any new taxes.
“I think 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 said.
Mr Abbott flagged widespread cuts to government spending in a speech to the Sydney Institute think tank on Monday night, with health and welfare given particular mention.
However, the prime minister remains committed to his generous paid parental leave scheme, which some Liberal colleagues want him to scale back because of the tough fiscal environment.
The $5.5 billion a year scheme would offer working women their regular wage for six months, capped at a total payment of $75,000, after giving birth and would be funded by a 1.5 per cent levy on big business.
“It’s not a welfare entitlement it is a workplace entitlement,” Mr Abbott said, when asked if he would rethink the policy.
“That’s a fundamental principle, and this government is absolutely committed to it.”
Mr Abbott conceded the May 13 budget would hit all Australians in some way and everyone do “his or her bit”.
“I suspect that on budget night if you are looking to something to complain about you will certainly be able to find something to be unhappy with,” he said.
Opposition Leader Bill Shorten said the debt levy would break an election promise made by the prime minister.
“Not one single person voted for Tony Abbott at the election expecting an increase in their income tax but that’s exactly what they are getting after the election,” he said.
Australian Greens leader Christine Milne doesn’t support a debt or deficit levy.
The government had itself increased the deficit by abandoning the carbon tax and depriving the budget of billions in revenue, she argued.