Surprise tax increases in 2017 Australian budget

Posted May 19, 2017

The Medicare levy has also been raised from 2 to 2.5 per cent to pay for Labor's National Disability Insurance Scheme, which will be fully rolled out by 2020, a raise that will impact almost every taxpayer. The increase will raise A$8.2 billion over the budget period.

Well, apart from an incredibly optimistic set of economic predictions, Morrison picked one huge fight on Budget night, slugging the biggest five Australian banks with a levy worth more than $6 billion.

Pumping money into infrastructure projects to create jobs and guarantee essential services has been another key theme in the lead-up.

It is a far cry from the Hockey-Abbott effort of 2014.

When Treasurer Scott Morrison arrived at Parliament on Tuesday morning ahead of delivering the 2017 Federal Budget, he said the document would disappoint the ideologues.

"There is no such thing as a good tax, there are only less-worse taxes, such as the GST".

He was expected to scrap the four-year Medicare freeze for Global Positioning System and fully fund the NDIS.

It has also been revealed that the Treasurer's master plan to hit the banks with the 6.2 billion dollar levy came about after a visit to London in January, during which he was taught how British regulators implemented similar measures on their big banks.

Contributions and earnings will be taxed at 15 per cent rather than at marginal rates. Withdrawals will be taxed at the marginal rates, less 30 percentage points.

The Commonwealth is open to acquiring a larger share or outright ownership of Snowy Hydro from the NSW and Victorian State Governments, Morrison said, "subject to some sensible conditions".

Older Australians wanting to downsize will be able to put in up to $300,000 from the sale of their homes as a top up on their superannuation.

But from 1 July this year, tax deductions relating to expenses incurred while visiting properties in Australia will be completely scrapped.

Housing investors will have to pay more. This is regarded by many economists as very optimistic.

The 2017/18 budget projects a return to balance in 2020/21, improving from a deficit of $29.4 billion to a projected surplus of $7.4 billion within four years.

The government will inject up to A$5.3 billion into the construction of the second Sydney airport. This will be available from July 1, 2017.

He also gave the major banks both barrels at the breakfast.

The head of the Australian Bankers' Association called the levy "a direct attack on jobs and growth".

The Australian Competition and Consumer Commission (ACCC) would be watching the banks "very, very carefully indeed", he said. JobSeeker recipients testing positive would be placed on the Cashless Debit Card.

"Once we have all the details and we can work through them, we will work out the best way to do that", he said.

The disability support pension will be denied for a disability caused exclusively by a person's substance abuse.

According to budget papers, the government expects the fund to ensure an ongoing source of revenue to support Australian skills development and the take-up of apprenticeships and traineeships. It was "practical and workable". This will cost the government $250 million over the forward estimates, and the government will provide $9.4 million to the ATO to set the scheme up.