Earn
Does Australia need an aged care tax?
The aged care royal commission has given the country a once in a generation opportunity to fix the aged care sector by increasing the tax rate, an industry expert has revealed.
Does Australia need an aged care tax?
The aged care royal commission has given the country a once in a generation opportunity to fix the aged care sector by increasing the tax rate, an industry expert has revealed.
Released on Monday, the aged care royal commission final report contained 148 recommendations aimed at bringing about a “paradigm shift” within the sector.
While the government has pledged nearly half a billion dollars in immediate relief to the sector, to achieve the vision of high-quality aged care, both commissioners Tony Pagone and Lynelle Briggs believe some form of aged care levy should be introduced.
The Australia Institute believes a new Medicare-style aged care levy, which could be applied on a progressive income basis, should be introduced to help Australia’s ageing population.
According to the researchers, decades of tax cuts have seen more inequality and an underfunding of the aged care system which has contributed to a sector in crisis.
“If we are to take what the Prime Minister calls this ‘once in a generation opportunity’ to address the aged care crisis seriously, we should also use it to make a generational shift in political attitudes to taxation in Australia,” The Australia Institute said.
The researchers pointed out that while the commission disagrees on various aspects of reforms that are needed, they were united on the need to increase government revenue.
“Increasing the Medicare levy by at least 1 per cent, or a new progressive aged care levy, is a rare opportunity to shore up Australia’s dwindling revenue base,” said Ben Oquist, executive director of the Australia Institute.
“The shocking findings of the royal commission have highlighted the urgent need for additional funding for Australia’s aged care sector.
The research institution highlights Australia is a relatively low-tax country compared with most OECD countries, with a Medicare levy rise of 1 per cent small in comparison to the size and scale of the recent income tax cuts.
“It is never politically easy to increase taxes, that is why it is crucial our Parliament does not miss this opportunity to permanently increase Australia’s revenue base,” Mr Oquist said.
“Collecting more revenue via a very modest permanent increase in the Medicare levy or a new progressive aged care levy will help ensure this opportunity is not lost, helping protect aged care funding into the future.”
Should Australia go down the path of a flat-rate levy, modelling based on current aged care services would mean a levy of 2.61 per cent.
Alternatively, a progressive levy could be applied to current tax brackets, starting at 2.1 per cent for those earning up to $37,000 and rising to 5.1 per cent to those earning more than $180,000.
Mr Pagone said that while nobody would enjoy paying extra taxes, an aged care levy would be the best way to “engender stability and confidence in the future of aged care financing”.
“I also consider it likely to change the way the community perceives aged care for the better, towards it being seen as something valuable in which we all have stake, and that it will lead to greater scrutiny and accountability in the way money is raised and spent on aged care into the future,” he said.
About the author
About the author
Tax refund
The ATO will be focusing on these four issues at tax time
The tax office has indicated it will be scrutinising areas where taxpayers are known to make mistakes. Read more
Tax refund
More than half of Aussies get stressed at tax time, survey finds
Many taxpayers feel that they may be missing out on deductions in their tax returns. Read more
Tax refund
Engage or face firmer action, ATO warns taxpayers with unpaid debts
The tax office is offering support and assistance to those with overdue debts. Read more
Tax refund
How to prepare for your tax return
While the end of the financial year is still a couple of months away, you can take action now to help maximise your tax return. Read more
Tax refund
What issues will be on the ATO’s radar this year?
H&R Block has outlined two main areas that the tax office is expected to focus on. Read more
Tax refund
How does the expanded low and middle income tax offset work?
Millions of taxpayers will receive hundreds of dollars more in their tax return this year. Read more
Tax refund
Why 90% of taxpayers could face a higher tax bill next financial year
A tax offset for over 10 million Aussies may not be extended in next month’s budget. Read more
Tax refund
PM ponders extension of low and middle income tax offset
Scott Morrison has hinted that a popular tax-saving measure may return in 2022. Read more
Tax refund
The ATO will be focusing on these four issues at tax time
The tax office has indicated it will be scrutinising areas where taxpayers are known to make mistakes. Read more
Tax refund
More than half of Aussies get stressed at tax time, survey finds
Many taxpayers feel that they may be missing out on deductions in their tax returns. Read more
Tax refund
Engage or face firmer action, ATO warns taxpayers with unpaid debts
The tax office is offering support and assistance to those with overdue debts. Read more
Tax refund
How to prepare for your tax return
While the end of the financial year is still a couple of months away, you can take action now to help maximise your tax return. Read more
Tax refund
What issues will be on the ATO’s radar this year?
H&R Block has outlined two main areas that the tax office is expected to focus on. Read more
Tax refund
How does the expanded low and middle income tax offset work?
Millions of taxpayers will receive hundreds of dollars more in their tax return this year. Read more
Tax refund
Why 90% of taxpayers could face a higher tax bill next financial year
A tax offset for over 10 million Aussies may not be extended in next month’s budget. Read more
Tax refund
PM ponders extension of low and middle income tax offset
Scott Morrison has hinted that a popular tax-saving measure may return in 2022. Read more