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Thursday, 2 May 2013

A modest proposal?

The Labor proposal to fund the NDIS (National Disability 'Insurance' Scheme) via an increase in the medicare levy of 0.5% sounds like a modest impost on taxpayers, especially when Julia Gillard says its 'only' $1 per day for someone earning $70,000 a year. However, that represents a 33% increase in the medicare levy, or an increase of almost 2.5% in total tax paid by someone on $70Kpa, since their average tax rate is only 20.4% (its less than their 32.5% marginal tax rate due to the tax free threshold and 19% marginal rate on much of their taxed income). It also adds up to an extra tax impost of over $16,000 over your working life if you earn an average of $70,000 while working from 18 to 65! Not really such a trivial amount.

Paying $350 pa to fund other people's 'insurance' cover for TPD or loss of income also seems a bit steep - especially for those, like me, who are already forking out a large amount of money each year by 'doing the right thing' and having adequate death, TPD and loss of income insurance cover in place. It will be another case of the middle income PAYG workers having to pay for something many people should be paying for themselves. While government assistance for parents looking after children born with a disability seems reasonable (I know this can be expensive, since we had 'out of pocket' medical expenses over $8,600 last year due to our kids medical conditions), I'm getting sick of reading that 'anyone' could be in need of the NDIS if they happened to have a car accident and lose both legs, had a stroke, etc. and couldn't work anymore. This is not true for anyone that bothers to pay for private TPD and loss of income insurance - but most workers choose to spend their disposable income on other things, and then expect the government to 'insure' them against life's adversities.

So, as usual, it looks like middle income PAYG workers will end up footing the bill for a massive social welfare scheme that costs a huge amount mainly due to rorts by many who should be paying for private insurance, but instead choose to spend their income on eating out, $100/mo mobile phone plans or other 'needs'.

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