Australia plans new tax to pay flood bill
Source: Agencies |
January 28, 2011, Friday
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Print Edition
Print Edition
FLOOD-HIT Australia wants to tax many not affected by massive flooding and cut spending to pay the more than US$5 billion bill it is anticipating after weeks of rain swamped the country's third-largest city and forced thousands from their homes.
With its tax proposal yesterday, the government hopes to avoid borrowing to pay for rebuilding after what could prove to the country's costliest disaster - a decision some economists and business leaders have questioned.
Prime Minister Julia Gillard announced that the temporary tax would apply to Australians on above-average incomes and would exclude those who were affected by the floods. The levy - 0.5 percent on incomes between US$50,001 and US$100,000, and a one percent on taxable incomes above that - is expected to raise US$1.8 billion.
A vast inland sea of floodwaters continued creeping across southeastern Australia yesterday, inundating farms and houses.
"In time, it may prove to be the most expensive natural disaster our nation has ever seen," Gillard said.
She said the government expected the floods to shave half a percentage point from Australia's gross domestic product, which the -government predicted in November would grow by 3.25 percent in the current fiscal year ending June 30.
The legislation is to be introduced to Parliament next month. The main opposition party is against it, but the measure seems likely to pass because Gillard's Labor Party commands a majority in the House of Representatives with the support of independent and Green lawmakers.
Western Australia state Premier Colin Barnett, one of only two state leaders who is not a member of Gillard's party, said most Australians would happily pay an extra tax to rebuild Queensland, the worst-affected state.
With its tax proposal yesterday, the government hopes to avoid borrowing to pay for rebuilding after what could prove to the country's costliest disaster - a decision some economists and business leaders have questioned.
Prime Minister Julia Gillard announced that the temporary tax would apply to Australians on above-average incomes and would exclude those who were affected by the floods. The levy - 0.5 percent on incomes between US$50,001 and US$100,000, and a one percent on taxable incomes above that - is expected to raise US$1.8 billion.
A vast inland sea of floodwaters continued creeping across southeastern Australia yesterday, inundating farms and houses.
"In time, it may prove to be the most expensive natural disaster our nation has ever seen," Gillard said.
She said the government expected the floods to shave half a percentage point from Australia's gross domestic product, which the -government predicted in November would grow by 3.25 percent in the current fiscal year ending June 30.
The legislation is to be introduced to Parliament next month. The main opposition party is against it, but the measure seems likely to pass because Gillard's Labor Party commands a majority in the House of Representatives with the support of independent and Green lawmakers.
Western Australia state Premier Colin Barnett, one of only two state leaders who is not a member of Gillard's party, said most Australians would happily pay an extra tax to rebuild Queensland, the worst-affected state.
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