Australian Flood Relief Relies on One-Year Tax, Cutbacks
Prime Minister Julia Gillard's $5.6 billion plan announced Jan. 27 is a hot political issue. She calls it a necessary response "to the immense national challenge of rebuilding flood-affected regions across Australia."
A one-year progressive tax on everyone earning more than $50,000 annually who was not directly affected by recent flooding is part of Australian Prime Minister Julia Gillard's plan to spend $5.6 billion rebuilding flood-damaged regions. Her Jan. 27 announcement of the tax was denounced by her chief political opponent; Gillard said the tax will generate $1.8 billion, $2.8 billion will come from government spending cuts, and $1 billion will come from delaying infrastructure projects to free up money and skilled labor.
"The recent floods across Australia pose a unique challenge," Gillard said. "This is likely to be the biggest natural disaster in Australia's history in economic terms -- an extraordinary event requiring an extraordinary response."
The tax will work this way:
- Those earning $50,000 to $100,000 will pay 0.5 percent of taxable income above $50,000.
- Those earning more than $100,000 will pay 0.5 percent of taxable income in excess of $50,000 and 1 percent of taxable income in excess of $100,000.
"Every cent raised through these measures will go directly to flood-affected regions across Australia," Gillard said. She said her government realizes many Australians have donated to help flood victims. "That is a great contribution," she said, "but entirely separate from the job of rebuilding essential infrastructure in flood-affected regions, which is what today's announcement, including the progressive, levy, is focused on."