The Government has taken a lot of heat from businesses over the past 24 hours for introducing a new tax to pay for the flood damage in Queensland – but exactly how is it going to affect you?
The effects of the new tax, and the flood damage bill in general, extend far beyond simply losing a few dollars in income. The Government has scrapped or delayed a number of programs that businesses have been built around, particularly in the solar sector.
Here’s what you need to know about the Government’s new tax, and how they’re going to come up with the $5.6 billion.
The levy
The flood levy is completely separate from other taxes and is not part of the Medicare levy as had been anticipated.
The levy will begin on July and end on June 30, 2012. The Government has said it will not extend the levy past this date.
Workers earning under $50,000 a year and victims of the floods will not be affected by the levy.
Those workers earning over $50,000 a year will be taxed at a 0.5% rate, while anyone bringing home over $100,000 a year will be taxed at a 1% rate.
The Government says that for about 60% of taxpayers, the levy will cost less than $1 every week.
Businesses have been advised by the Government that while they are not subject to the levy, they will need to change their PAYG withholding schedule for employees.
How income will be affected
Here is the impact you are likely to see in your pay packet each week:
- $55,000 – $0.48 per week
- $60,000 – $0.96pw
- $65,000 – $1.44pw
- $70,000 – $1.92pw
- $75,000 – $2.40pw
- $80,000 – $2.88pw
- $100,000 – $4.81pw
- $120,000 -$8.65pw
- $140,000 – $12.50pw
- $160,000 – $16.35pw
- $180,000 – $20.19pw
- $200,000 – $24.04pw
What’s been cut?
Overall, the levy will contribute $1.8 billion towards the $5.6 billion damage bill, leaving a shortfall of $3.8 billion – so where is it going to come from?
The Government has cut or delayed a significant number of projects, funds and grants. Here’s what you need to know:
- $1 billion from infrastructure. Various road projects in Queensland and other states will be delayed. This could possibly hit the construction and engineering sectors across the country.
- $429 million from scrapping cash for clunkers. This was an election promise in 2007, and the Government is taking some heat for it. The program would have involved a buy-back scheme for some old cars.
- $350 million from rural infrastructure projects. Various infrastructure funds in regional areas will be taken away.
- $299 million from Capital Development. The Capital Development Pool is a program that provides funds to universities to provide new facilities and services. Any new projects from 2012 on will be delayed.
- $324 million from Green Car fund. This would have been provided to major auto manufacturers to help them build greener cars.
- $264 million from rental assistance. This project is now limited to 34,000 people rather than 50,000, and property experts believe it could place pressure on prices.
- $250 million from carbon capture. This coal project is having its funding both reduced and delayed.
- $250 million from the Solar Flagships program. This project was designed to help fund large-scale solar projects. Funding will be reduced.
- $160 million from solar hot water rebate programs. This will really hit some businesses that rely on government subsidies. The assistance will now be set at a cap.
- $365 from other green/climate change programs. Some of these programs include delaying the second phase of the green start program, and limiting LPG conversion subsidies.
- $88 million from education. The Australian Learning and Teaching Council will exist no longer from 2012.
- $56 million from Adelaide transport. The funding for city access to the O-Bahn will be scrapped.
