Australia plans new tax, cuts to pay for floods
The govt proposed a new tax to partially recoup more than USD 5 billion it expects to spend on rebuilding after widespread flooding that could prove to be Australia`s costliest natural disaster.
Canberra: The government proposed a new
tax on Thursday to partially recoup more than USD 5 billion it
expects to spend on rebuilding after widespread flooding that
could prove to be Australia`s costliest natural disaster.
Prime Minister Julia Gillard announced that the
temporary new tax would apply to Australians on above-average
incomes and raise USD 1.8 billion to pay for massive
destruction from weeks of flooding in eastern Australia.
The flooding that has claimed 35 lives, damaged or
destroyed 30,000 homes and businesses and cost at least USD 3
billion in damage to crops and lost coal exports.
Initial estimates of the overall damage bill plus the
cost of emergency grants to flood-effected communities for the
federal government is USD 5.6 billion and likely to rise,
Gillard said. The federal government must pay for 75 per cent
of the costs to rebuild infrastructure such as roads and
ports, while state and local governments pay 25 per cent.
The government plans to cut spending in other areas
including clean energy industry incentives to make up the
remainder of the federal bill for infrastructure.
"In time, it may prove to be the most expensive
natural disaster our nation has ever seen," Gillard told the
National Press Club.
She said the government expected the floods to shave
half a percentage point from Australian gross domestic
product, which the government predicted in November would grow
by 3.25 per cent in the current fiscal year ending June 30.
The legislation is to be introduced to parliament next
month. The main opposition party opposes it, but the measure
seems likely to pass because Gillard`s Labor Party commands a
majority in the House of Representatives with the support of
three independent lawmakers plus a legislator from the minor
Gillard, whose government has vowed to make Australia
one of the first developed countries to return its annual
budget to surplus two years after the global economic crisis,
has dismissed the prospect of borrowing to pay for the