Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2006 involves some routine annual amendments to the Medicare Levy Act that are required for the indexation of annual thresholds. The bill also amends the Medicare Levy Act 1986 to increase the Medicare levy low-income thresholds for individuals and for families. The dependent child/student component of the family threshold will also be increased.

The bill also increases the Medicare levy low-income threshold for pensioners below the age pension age so that they do not have a Medicare levy liability where they do not have any income tax liability. The A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 will also increase the Medicare levy surcharge low-income threshold in line with movements in the consumer price index. The individual thresholds will be increased, from $15,902 to $16,284. The level of the family income threshold will also rise, from $26,834 to $27,478. That threshold will also be increased by a further $2,523 for each dependent child or student. This 20 per cent phase-in threshold is effectively the imposition of an effective marginal tax rate on low-income earners. While Labor supports the measure, it does not reduce the EMTR effect; it simply shifts it upwards—which is an important point for the House to recognise and for the government to acknowledge.

The bill also proposes to increase the threshold amount for pensioners below the age pension age. The increase ensures that eligible pensioners do not have a Medicare levy liability where they face no income tax liability. The threshold amount for pensioners who are under the age pension age will increase from $19,252 to $19,583. The Medicare levy also applies at a reduced rate to taxpayers who have taxable incomes above the threshold amount but not more than the phase-in limit. For the 2005-06 year, the rate of the Medicare levy payable in these circumstances is limited to 20 per cent of the excess over the threshold amount that is relevant to a particular person. The phase-in limit for individuals has been increased from $17,191 to $17,604. The phase-in limit for pensioners who are under the age pension age will increase from $20,812 to $21,170.

There is no phase-in limit for families as the figure changes with the numbers of dependants. Instead there is a formula that limits the levy payable by persons with families to 20 per cent of the 2005-06 years for the amount of family income that exceeds their family income threshold. This range is increased where there are dependants. A Medicare levy surcharge of one per cent applies on taxable income in certain cases where taxpayers do not have private patient hospital cover. The surcharge of one per cent also applies to reportable fringe benefits in certain cases where taxpayers do not have private patient hospital cover. However, a family member who would otherwise be liable for the surcharge is not required to pay the surcharge where the total of the person’s taxable income and reportable fringe benefits do not exceed the individual low-income threshold amount. Unlike the Medicare levy, there is no shading in of the surcharge above threshold amount.

References to the individual low-income tax threshold amount of $15,902 in the Medicare levy surcharge provisions in respect of surcharge on taxable income are also being increased to $16,284. References to the individual low-income threshold amount of $15,902 in the Medicare levy surcharge provisions of the A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 in respect of surcharge on reportable fringe benefits will also be increased to $16,284. I want to make some general comments about health policy. On that basis it is now a good time to move the opposition’s second reading amendment. I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

condemns the Government and Minister for Health for squandering the opportunity to fundamentally reform our health system;

(2)

condemns the Government for failing to invest in rebuilding our health system, including Medicare, for the future, focused on prevention, early intervention and an ageing population; and

(3)

condemns the Government for its failings in relation to our health system, as evidenced by delivering a Budget containing hidden cuts and the related decision to sell off of Australia’s biggest not for profit health insurer, Medibank Private”.

As I think I have indicated, Labor supports the bill as it is presented to the House. It is an annual event that ensures that people are not disadvantaged by increases to the consumer price index but it is a disadvantage I want to talk about.

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