Australian flood tax announced

Thursday 27th Jan 2011 by theWeather Club

Many an under-pressure manager of a struggling football club will have first become aware of their impending doom with the club board's statement giving their full support, but without mentioning an extended contract. Australian taxpayers must have got that same sinking feeling when prime minister Julia Gillard dismissed talk of a flood tax as irresponsible without actually dismissing the possibility. Today the inevitable happened as Gillard has announced a one off tax to help pay for devastating floods that she says will cost A$5.6bn (£3.5bn) in reconstruction. Gillard said the 12-month tax, starting from 1 July, would be levied on those earning A$50,000 or more. Those affected by floods would not pay.

The move comes as the financial costs of the flooding are beginning to be seriously assessed. "The Treasury's preliminary estimates are that GDP (Gross Domestic Product) growth in this financial year will be about half a percentage point less due to the floods," Ms Gillard said. "The best preliminary estimate of the direct cost to the federal budget of the summer's flood disaster is A$5.6bn." Large parts of Queensland, the eastern seaboard and Victoria have been inundated by flooding. Agriculture, mining and transport infrastructure have been badly hit, along with the massive damage to private homes. As well as the tax, cuts to government spending will help meet the reconstruction bill. Ms Gillard is essentially arguing that every Australian should lend a helping hand, that the sums involved are affordable and modest - it's already been dubbed a 'light-touch levy."

However the tax is not a foregone conclusion. The prime minister must get the tax through parliament and as she relies on minor parties and independents in both houses, she faces a tough task given that the main opposition is opposed to the measure.