Tony Abbott’s controversial levy-not-a-tax is unlikely to survive in the May 13 Budget after conservative forces who usually back the Prime Minister today lined up to condemn it.

Mr Abbott also is facing private criticism from industry groups over what they see as the lack of Budget consultations, the sudden appearance in the media of possible measures affecting them, and weak planning.

But the central debate today is over the speculation the Budget will include a levy on those earning $80,000 a year and above, to last for four years.

Mr Abbott did not diminish the speculation when he took on the argument that the levy was not a tax.

The Institute of Public Affairs, the free market think tank normally an Abbott ally, was more savage than most in attacking the notion of a tax which could raise more than the carbon price, which the Prime Minister wants abolished.

”The Abbott government should not punish Australians earning more than $80,000 a year by increasing their income taxes,” said Dr Julie Novak a senior fellow at the IPA.

”The Coalition should be reducing government spending and cutting taxes. Instead, the proposed deficit levy sends the signal the government wants to punish people who work hard to improve the living standards of themselves and their families.

“As the Prime Minister has stated numerous times, no country can tax its way to prosperity, and so the government must not send the message to Australians that our fiscal problems can be resolved by increasing taxes.’’

Employer groups such as the Business Council of Australia and the Australian Industry Group have also criticised the proposal — not officially confirmed as government policy — because it could weaken economic activity.

But the more embarrassing opponents could come from within Mr Abbott’s own ranks with reports Liberal MPs have rejected the levy as “absolutely crazy”, according to an ABC report, and a breach of election promises.

Mr Abbott has demanded the end of carbon pricing and in a speech last night said it was costing the average household $550 a year. He did not mention the compensation which came with the program.

A levy on wage earners would cost someone on $80,000 a year about $800. The total revenue would be greater than the $2.8 billion forecast to be raised by carbon pricing in 2014-15.