Surprise tax increases in 2017 Australian budget

The 2017-18 budget is a far cry from the 2014 offering from Hockey and Abbott

The 2017-18 budget is a far cry from the 2014 offering from Hockey and Abbott

It's all bad news for Australia's banks as the shock A$6 billion ($6.4b) levy revealed in Tuesday night's budget sinks in with market watchers.

There's fairness and opportunity, just not much security.

"The Snowy Mountains Scheme is the benchmark for nation building infrastructure", Treasurer Scott Morrison said.

Economic nuts and bolts aside, there is big spending in infrastructure and education, while the $13 billion in so-called "zombie" measures from Joe Hockey's ill-fated 2014 budget - stymied by the Senate - have been dumped.

"Unlike the previous bank deposit tax, this is specifically not a levy on pensioners' and others' ordinary deposit accounts, nor is it on home loans".

And the big element will be the 0.5 per cent increase in the Medicare levy to be paid by all singles earning $21,655 a year and above, and couples on $36,541, with additions for dependent children. Morrison said this would "provide transparency about what it really costs to run Medicare and the PBS and a clear guarantee on how we pay for it". It would mean that it would be taxed at 15% rather than the marginal tax rate, and when the money is withdrawn, it is taxed at marginal tax rates less a 30% offset.

"This will rein in a high growth deduction item and improve taxpayer confidence in the negative gearing system", Morrison said.

Downsizers over the age of 65 will be able to make a non-concessional contribution of up to $300,000 into their super fund from selling the family home.

People who claim travel expenses on their tax for inspecting, maintaining or collecting rent on their rental property will no longer be allowed to after July 1.

Housing investors will have to pay more.

Mr Morrison has gleaned that people are furious with banks.

The Treasurer believes better days are ahead, thanks to an uptick in the global economy.

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For the coming 2017-18 year growth is forecast at 2.75% and unemployment at 5.75%.

"This is an honest Budget", Mr Morrison told Parliament.

The government plans to spend AU$5.3 billion ($3.9 billion) on building a second worldwide airport in Sydney which is due to open in 2016.

According to The Australian, one way in which the mooted scheme could be introduced is through comparing a national register of foreign owned land which is being constructed by the Australian Taxation Office with water usage levels kept by each state to determine which properties are both (a) owned by foreigners and (b) also sitting vacant.

The government also plans to increase taxes and charges.

But Labor supported the tax on the banks. JobSeeker recipients testing positive would be placed on the Cashless Debit Card.

"You say they're principles important to the Liberal Party", Ms Sales said.

The disability support pension will be denied for a disability caused exclusively by a person's substance abuse.

Property investors have been hit by a number of measures in the budget in Australia this week in a bid to level the playing field between homeowners and investors.

"Business Council of #Australia chief executive Jennifer Westacott called it a orrying policy precedent". It was "practical and workable". "They feel they have had a tax imposed on them uniquely that does not apply to any other part of the business community", she said in a statement overnight.

Angry bankers are set for a showdown with federal government officials over a surprise $6.2 billion levy on Australia's largest financial institutions. He would seek advice about its legality.

The Greens attacked the planned drug testing trial for some new welfare recipients was "a violation" and a "very unsafe precedent".

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