Federal budget: Tony Abbott facing internal dissent over 'crazy' debt levy proposal

Updated

Prime Minister Tony Abbott is facing dissent from within his own party over a proposal to introduce a debt levy, with one MP saying it would be "absolutely crazy" and amount to a broken election promise.

Mr Abbott says the Government is "mulling over" a range of ideas, but has confirmed he is considering a temporary levy to help repay the nation's debt.

"There's been speculation, as you know, about a deficit reduction levy," the Prime Minister told Fairfax Radio.

"Certainly it is my intention that people like myself, high-income earners, should bear a significant quantum of the burden when it comes to sorting out our problems.

"We do have a short-term problem and we do need to deal with it.

"Do I say that no charges will rise? No, I don't."

There are reports the deficit levy would kick in for people earning $80,000 per year, with workers on that salary paying up to $800 per year in extra tax.

The Prime Minister would not confirm specific details and later stressed that no final decisions had been made.

And he denied a deficit levy would be a breach of his repeated promises before the election not to introduce new taxes.

"I think if there was a permanent increase in taxation, that would certainly be inconsistent with the sort of things that were said before the election," he said.

But a federal Coalition MP, who did not want to be named, told the ABC the levy was a "crazy idea" and a "clear breach" of the Government's pre-election commitment.

"I will be raising this in the party room," the MP warned.

"This is absolutely crazy. This is an absolute breach of our election promise. This is the type of thing that makes people quit political parties.

"This is absolutely nuts. I for one won't be standing for this."

"I'm not in favour," said another Coalition MP. "We're just being inconsistent, quite frankly."

Another Coalition MP confided to the ABC that a deficit levy would be Mr Abbott's "no carbon tax political tombstone".

Queensland LNP senator Ian Macdonald says he knows Mr Abbott will stand by his commitment of "lower and fairer taxes".

"We did want to and we made the commitment to have lower and fairer taxes and I know that Tony Abbott will stand by that commitment," he said.

"But we have a horrendous debt situation."

The Senator said he was concerned that any levy on individuals would bypass business and put small business owners on the back foot.

"And a scheme where the butcher and the baker as individuals will have to pay a levy, but not Woolworths and Coles, who are competing with the local butcher and baker, I think that is unfair," Senator Macdonald said.

"I had that view consistently when Labor introduced the flood levy, and I maintain that position."

Opposition Leader Bill Shorten is predicting the Government will "fold" on the plan before the budget, but he is vowing to fight the "deceit tax" in Parliament if it does not.

"We have the remarkable spectacle of a desperate Prime Minister trying to pretend that a tax increase for a period of time is not really a tax increase," Mr Shorten told reporters in Bendigo.

"That's wrong Mr Abbott. A tax increase is a tax increase is a tax increase. We will fight a tax increase on ordinary Australians. Labor will have no part of it."

The Greens are vowing to block any deficit levy in the Senate, but the idea is being supported Australia Council of Social Services chief executive Cassandra Goldie.

"The levy would need to be done sensibly, it would need to carefully targeted, but the NDIS levy was right," she said.

Abbott facing paid parental leave scheme pressure

Mr Abbott is also facing renewed pressure from within his own ranks to dump his paid parental leave scheme, which would see new mothers paid their full wage for six months after the birth of their child.

It would cost the budget $5.5 billion per year, and the ABC understands a handful of Coalition senators are willing to cross the floor and block the Prime Minister's signature policy.

Nationals Senator John Williams, who previously told the ABC the scheme should only be introduced when the economy is strong, said on Tuesday it should be "put on ice".

"We need to get the books in order, stop the borrowing, and this is a scheme, I think, that needs to be put on ice or delayed until the economy is stronger," Senator Williams said.

He said he had "spoken to colleagues who have concerns about the cost of the program" but did not confirm if several of his colleagues would oppose it in the Parliament.

He said there was no need to tamper with Labor's paid parental leave scheme, which was introduced following a review by the Productivity Commission.

"The current scheme is working well - my daughter-in-law has had two children under that scheme and she's been very grateful for the benefits received from the minimum wage for 18 weeks," he said.

"My daughter is pregnant now; she's quite happy with the current scheme."

Mr Abbott is refusing to back down, saying he has taken the idea to two elections, and describing Senator Williams as an "internal dissident" on the issue.

"Because my own thinking on this has evolved, I'm confident other people's thinking can evolve," he said.

But Senator Macdonald says the scheme conflicts with the interests of his constituents in regional Queensland.

"I'm very keen to see northern Australia develop, but it doesn't get developed if we spend very limited resources on what many seem to think is an over-the-top and rather luxurious arrangement for a select group of people," Senator Macdonald told RN Breakfast.

The Greens say they are willing to negotiate with Mr Abbott to help him pass the scheme, but are pointing to what they describe as an "internal revolt" against the idea from within the Government.

Nationals deputy leader Barnaby Joyce admits the Government does not have the numbers to get the scheme through the Senate.

"So that's why I'm not losing sleep at nights talking about something that I can't see its passage through the Senate at this time," he said.

Topics: government-and-politics, budget, tax, abbott-tony, australia

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