The claim

The Federal Opposition has spent a lot of time talking about "millionaires" in the wake of the May 9 budget.

The word "millionaires" was mentioned seven times in Bill Shorten's budget reply speech alone.



Shortly after Treasurer Scott Morrison began his budget speech, a post appeared on Mr Shorten's Facebook page stating:

"Malcolm Turnbull has announced a tax cut for millionaires and a tax hike for working Australians."

Mr Shorten made similar claims on his Twitter feed.

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Did Prime Minister Malcolm Turnbull really announce a tax cut for millionaires and a tax increase for the rest of us in the budget?

The verdict

Mr Shorten's claim is over the top.

The measures announced in the 2017-18 budget do not include any personal income tax cuts.

Mr Turnbull has not made any "announcement" about millionaire tax cuts.

An additional tax that was brought in by the Abbott government in 2014, the temporary budget repair levy, was, by law, only scheduled to last for three financial years.

Unless the Parliament takes the proactive step of passing new legislation, the levy will not continue beyond June 30.

And the use of the emotive term "millionaire" misleads about the type of people who have been paying the soon-to-expire levy.

It applies to anyone with an income over $180,000 a year, kicking in at a level far lower than $1 million a year, and has nothing to do with the value of assets people hold.

Mr Shorten correctly notes that the budget does include a "tax hike": the Government is increasing the Medicare levy from 2 per cent to 2.5 per cent.

But this increase will apply to most people including "millionaires", not just so-called "working Australians".

What is the tax cut Mr Shorten refers to?

The "tax cut" Mr Shorten refers to is not a 2017-18 budget measure.

He is referring to the expiry of the "temporary budget repair levy", a 2 per cent additional tax that was announced by the former treasurer Joe Hockey in the 2014-15 budget in May 2014.

At the time, Mr Hockey said:

"Tonight we are asking higher-income earners to help repair the budget. From 1 July this year and for just three years, we are asking higher-income earners to pay a temporary budget repair levy that in effect increases the top marginal tax rate by two percentage points, for people earning more than $180,000 a year."

The levy applies to people who have a taxable income over $180,000 a year, irrespective of the value of the assets that person has.

A claim posted on Bill Shorten's Facebook page on May 9, 2017 ( Facebook )

So, a retired person who owns millions of dollars worth of property but has a low income does not pay the levy.

Legislation to impose the levy, made up of 15 separate bills, was passed by both houses of Parliament in June 2014.

The Tax Laws Amendment (Temporary Budget Repair Levy) Act 2014 provides that "extra income tax" is payable by individuals who have a taxable income exceeding $180,000 in a "temporary budget repair levy year".

The term "temporary budget repair levy year" is specifically defined in section 4-11(5) of the law to be the 2014-15, 2015-16 and 2016-17 financial years.

The explanatory memorandum that accompanied the law states that the government's "first budget will start the process of repairing the nation's finances" and the introduction of the temporary levy means that "high-income individuals will contribute to the task of repairing the budget based on their ability to pay".

It is not suggested in the memorandum that the levy may remain in place beyond three years or until the budget is fully "repaired".

When the legislation was tabled for a second reading in Parliament, then assistant treasurer Steve Ciobo referred to the levy in the context of a medium term budget repair strategy:

"Without the temporary budget repair levy, the cost of repairing the budget in the medium term would be borne by low and middle-income households alone. The expenditure savings that we have announced in this budget need to be supported by longer term, structural reforms to the tax system. This is the only way to ensure that the government's call on resources is sustainable."

Does the levy end automatically?

Because of wording of the legislation, the levy will not be collected after the 2016-17 financial year regardless of what Mr Turnbull has said or not said.

If the Government wants to extend the levy to future financial years, it will need to proactively introduce and pass further legislation through both the House of Representatives and the Senate.

Sorry, this video has expired Bill Shorten mentions his claim about the budget giving a "$16,500 tax cut" to "millionaires" in an interview with ABC's Michael Rowland."

Mr Shorten is familiar with the temporary nature of temporary levies.

In 2011, as assistant treasurer in the Gillard government, he gave a speech in Parliament in support of the Temporary Flood Reconstruction levy, which was imposed on people with incomes above $50,000 a year.

It was intended to last for 12 months, and that is how long it lasted.

What about the 'tax hike'?

The 2017-18 budget does include a tax increase.

Mr Shorten is referring to the budget announcement that from July 1, 2019 the Medicare levy will increase by half a percentage point (from 2 to 2.5 per cent) for all people who have reached the threshold for paying it.

For most people in the workforce, this will mean that if you earn above $21,655 a year, you will pay more tax after July 2019 (assuming the Government gets the legislation through Parliament).

Pensioners may be exempt from paying the Medicare levy if they earn under $34,244 (singles) or $47,670 (couples) a year.

Who is a millionaire?

Despite the emotive language, there is no settled definition on who a "millionaire" is, and how they differ from a "working Australian".

The Macquarie Dictionary provides two possible meanings:

"a person who has more than a million dollars, pounds, euros, etc., held as cash in a bank"

"a person who has more than a million dollars, pounds, euros, etc., held as cash in a bank" "a very rich person"

The second definition does, of course, leave open the question of who qualifies as "very rich".

Investment bank Credit Suisse measures wealth by looking at the "value of financial assets plus real assets (principally housing) owned by households, minus their debts".

The bank estimates there are around just over one million US dollar millionaires in Australia.

With Australia's high property prices, many Australians would fall within this definition: financial advice company MLC points to statistics showing that "the average net worth for all Australian households was $809,900 in 2013-14".

Both the "tax cut" and "tax hike" to which Mr Shorten refers relate to a person's income, not their asset level.

Less common, but not unknown when politicians make claims, is the description of a millionaire being someone with an income over $1 million a year.

What exactly constitutes a "working Australian" is even harder to determine.

Someone who earns $50,000 a year might be one: they did not pay the temporary budget repair levy and will have to pay a higher Medicare levy.

But are they still a "working Australian" if they also have a $1.5 million home in Sydney?

And on Mr Shorten's definition, would someone earning $200,000 but renting be a "working Australian"?

What is clear is that budget "tax hike" will affect both average "working Australians" and those who earn very high incomes including $1 million a year.

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