Fiscal illusion and the Medicare

Sinclair Davidson at Catallaxy Files is spot on:

Only mean-spirited people would begrudge paying more tax to support the disabled. Right? Well that’s the story the Prime Minister’s Press Office is pushing on Twitter.

NDIS -PMO tweet


This is a classic case of fiscal illusion. The first thing to remember is that the Commonwealth cannot earmark money for specific purposes. Section 81 of the Constitution reads:

All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.


So all revenue raised goes into a single big pot of money that then gets used to pay for all the school halls and insulation and what ever else they can think up in Canberra. So by increasing the so-called Medicare levy the government have simply increased taxes. In this case an additional income tax with a slightly different tax base to the larger well-known personal income tax.

The fact of the matter is this: The new tax increase will not cover the cost of the NDIS. The government is going to have to increase debt to pay for the NDIS – this is because the government simply refuses to cut any wasteful expenditure.


If you want an NDIS, cut spending don't increase taxes. It's as simple as that.

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