Budget 2017: Medicare Levy hike is a ‘tax and spend’ Budget betrayal

Jeremy Sammut

09 May 2017

cis logo 640x360The decision to raise the Medicare Levy to pour even more taxpayer’s money into health and the NDIS shows the Turnbull Government has given up the fight for economic reform, according to Centre for Independent Studies’ Senior Research Fellow, Dr Jeremy Sammut.

“The Budget has launched a new raid on the hip pockets of people who in reality — as I have shown in my new report, Fiscal Fiction: The Real Medicare Levy — are  effectively paying almost seven times the official Medicare Levy rate to pay for Medicare,” Dr Sammut says.

It’s not like the nine million income earners paying the levy each year who are being slugged again by hiking the Levy don’t already pay large amount income tax to pay for ‘free’ healthcare.

“The additional 0.5% announced in tonight’s Budget will not merely increase the levy to 2.5% of personal income: it will actually push the real levy rate to beyond 11% of taxable income – higher than the 10% GST.

“The official Medicare Levy is a fiscal fiction that leads people to believe that the levy pays for Medicare.

“The Medicare Levy increase is predicted to harvest an extra $3.55 billion in 2019-20, giving a total of $21.76 billion. However the three biggest federal health costs alone add up to $58.1 Billion – and that is without accounting for tens of billions of state expenditure in addition.

“To raise the full amount required to fund all the doctor visits, medications, and public hospital care paid for under the Medicare scheme, the ‘real’ Medicare Levy rate would have to be over 11%.

“Conservative estimates suggest that 11% of the total national health spend is wasted every year,” Dr Sammut said.

“The proposed Medicare Guarantee Fund — into which the 80% of Medicare Levy rise will be paid plus an unspecified amount of income tax per year to pay for the MBS and PBS — might be a step towards greater transparency in establishing the true cost of health to taxpayers.

“But this could be done without another broken promise tax rise. The failure to stand up to the AMA also increases the likelihood the new fund will simply become a sacred cash  cow that underwrites the inefficient business models of the medical profession.”

Jeremy Sammut is Director of the Health Innovations Program at The Centre for Independent Studies, and author of the report, Fiscal Fiction: The Real Medicare Levy.

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