Campbell Newman’s great big new tax

Samuel Jay, writing at Catallaxy, notes that Queensland Premier Campbell Newman wants a new tax to pay for the NDIS through increasing the medicare levy.

As he correctly points out:

Increasing the  medicare levy by 0.5 percentage points is poor public policy. The medicare levy (which is on top of the top marginal tax rate and has quite a few exemptions) is a hit on income tax for which there is no reduction through tax deductions. It gives the impression to taxpayers that their medicare levy actually pays for health costs, when it covers less than 1/4 of health costs. Hypothecated taxes are generally inefficient because expenditure is not matched to the revenue and it provides inappropriate incentives for efficient management of a program. In the case of the medicare and so-called NDIS levies, it is worse since they are pseudo-hypothecated taxes – they appear to be for a specific purpose but in fact are just general revenue under a different label. In general the task of financing government expenditure should be held separate from the expenditure. It is the role of government within its fiscal strategy to produce balanced budgets – to raise revenue efficiently to meet the day-to-day expenditure of government.

The last thing taxpayers need right now is to be hit with another new tax for a big-spending big-government scheme.

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