Mandatory Medicare levy surcharge proposal affects all high earners

The Australian Council of Social Service (ACOSS) has created a budget proposal that would require all high earners to pay a Medicare levy surcharge. It is a one to 1.5 percent increase that would raise $4 billion every year.

Earners who will be affected include the high-income Australian without private health insurance and families earning more than $180,000 a year. All individuals without children with an annual net salary of more than $90,000 a year are also affected with the mandatory levy surcharge.

"One option to address the revenue challenge would be to increase the levy by a further 0.5 points to 2.5 per cent. But our preferred option, which would raise a similar amount, is to remove the exemption for holders of private hospital insurance from the high-income surcharge. It would affect only those households very likely to have a capacity to pay," Australian Council of Social Service chief executive Cassandra Goldie told Fairfax Media.

ACOSS expected a total savings package that cost $9.5 billion per year. The savings would include the removal of Private Health Insurance Rebate that cost $3.4 billion a year. The proposal suggested that the Extended Medicare Safety Net would be axed that would cost $340 million savings. Fuel tax credits for off-road use, except agriculture, that would be axed would save $2 billion a year. Other savings include phasing out negative gearing saving $300 million and winding back the capital gains tax discount saving $500 million. The superannuation preservation age would be lifted from 60 to 67 over 15 years.

Part of the budget proposal is the sugar tax that would be introduced from July 1. It would be a two-tier volumetric sugar tax for water-based drinks with added sugar. For drinks with five to eight grams of added sugar per 100 ml, a rate of 30 cents per litre would be charged. For drinks with over eight grams of added sugar per 100 ml, a rate of 40 cents per litre would be charged. Pure fruit juices were not included.

"Without cuts of the kind we have proposed, it is clear that governments will not be able to fund the cost of essential services to the level we need. What's not reasonable are cuts that would require people who need to see a doctor or attend hospital or move into aged care to pay more," Goldie said. Public hospitals, preventative health services, community-based health services and dental health services would benefit from half of the savings from Private Health Insurance Rebate removal.