Wednesday, 10 May 2017
The Budget says that $8.2 billion to be raised over the four year Forward Estimates by increasing the existing Medicare levy on all incomes will be used to fund the National Disability Insurance Scheme (NDIS) and for funding Medicare.
Increase in the Medicare levy
The Government will increase the Medicare levy by half a percentage point from 2.0 to 2.5 per cent of taxable income from 1 July 2019.
The Government estimates the increase will raise an additional $8.2 billion in tax revenue over the forward estimates period
Funds raised by the increase will be used to ensure the National Disability Insurance Scheme (NDIS) is fully funded. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.
The Government will use all revenue generated by the Medicare levy to support the NDIS and to guarantee Medicare. In particular, the Government will credit $9.1 billion to the NDIS
Savings Fund Special Account when it is established.
The Budget says this is the net impact across all heads of revenue, not just the Medicare levy.
Increasing the Medicare levy low-income thresholds
The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners from the 2016-17 income year.
The increases take account of movements in the CPI so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.
The threshold for singles will be increased to $21,655. The family threshold will be increased to $36,541 plus $3,356 for each dependent child or student. For single seniors and pensioners, the threshold will be increased to $34,244. The family threshold for seniors and pensioners will be increased to $47,670 plus $3,356 for each dependent child or student.
This measure is estimated to have a cost to revenue of $180.0 million over the forward estimates period
Medicare Guarantee Fund
The Medicare Guarantee Fund (the Fund) will be established as a special account from 1 July 2017 to guarantee the Government’s commitment to the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS) into the future.
The Fund will be credited each year with revenue raised from the Medicare levy (excluding amounts to fund the National Disability Insurance Scheme) as well as a portion of personal income tax receipts sufficient to cover the costs of the MBS and the PBS.
The forecast annual contributions to the Fund over the forward estimates will be updated at every budget update, commencing with the 2017-18 Budget, in line with forecast MBS and PBS expenditure over the forward estimates.
These amounts will be held in the Fund for the sole purpose of funding the MBS and PBS, the Budget says.
Health and aged care payments systems
The Budget provides $67.3 million in 2017-18 to modernise the health and aged care payments system and ensure that the Government continues to own and operate the ICT systems that deliver Medicare, the Pharmaceutical Benefits Scheme, aged care and related payments into the future.
The Budget says the measure will “enable market engagement, procurement and design work to continue, which is required to replace aging ICT systems that deliver a number of Commonwealth payments. This measure also includes funding for essential maintenance of current ICT systems.
Click below to view source
Budget Paper 2 Part 2 – Expenses, pages 110, 167
Budget Paper 2 Part 1 – Revenue – Treasury pages 24, 25
Source: AAT