Tax on, tax off: rosy economy spells end to Medicare levy

With its tax on, tax off, approach, there is an echo of the Karate Kid's Mr Miyagi in the forthcoming federal budget, presumably Scott Morrison's last before an election.

After repeated hints about personal tax cuts, one element of the plan has become clear in the form of a now-to-be-scrapped 0.5 per cent Medicare levy designed to help pay for the National Disability Insurance Scheme. The trouble is, the tax hike was never actually imposed. Now it will not be.

Doubtless the government covets a political dividend from its generosity which it says is only possible because of the strong economy it has fostered and the consequent revenue flowing into Treasury.

Treasurer Scott Morrison announced the levy increase in last year's budget.
Photo: Alex Ellinghausen

The government says tax receipts until February were almost $5 billion higher than anticipated with $1.2 billion more coming in from individuals and around $3 billion more from companies. Which is another way of saying the tax revenue is being raised anyway.

While voters might not specifically reward removal of a tax that was merely mooted, many will be heartened by the rosier conditions underpinning it.

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