Australians could be hit with a $610 tax hike if the government implements a key recommendation from the aged care royal commission.
Australians could be hit with a $610 tax hike if the government implements a key recommendation from the aged care royal commission.

Why your tax bill could jump $610

Australians could be hit with a tax $610 tax hike under a Medicare-style levy proposed to fix the aged care system.

The aged care royal commission released its final report on Monday, outlining 148 recommendations as part of an extensive overhaul of the sector.

Both commissioners - Lynelle Briggs and Tony Pagone - recommended some form of levy, but were at loggerheads over how it would function.

Mr Pagone recommended a Medicare-style levy with funds required to be diverted to the aged care sector.

RELATED:Aged Care Royal Commission hands down final report

 

Ms Briggs urged the government to introduce a general, 1 per cent "aged care improvement levy", sourced from personal taxable income.

That would increase Australia's overall tax revenue, which could be used on aged care.

That would cost the median person who paid the Medicare levy roughly $610 annually and raise nearly $8b for the aged care centre, according to The Sydney Morning Herald.

Just under 10 million Australians would pay extra income tax as a result, it reported.

Prime Minister Scott Morrison has not ruled out the Medicare-style levy in response to the damning findings.

Health Minister Greg Hunt refused to commit to either proposal, but said the government's "formal response" would be revealed in the May budget.

He said the commissioners disagreed "in good faith" over the levy.

"That is absolutely fine and understandable. This is one of those areas where commissioners presented different views," he said.

"Yesterday we announced a $452m response with a five-year, five-pillar plan for aged care (which) above all focuses on the needs of individuals.

Greg Hunt says the government will consider both proposals, and its full response would be revealed in the May budget. Picture: NCA NewsWire/Gary Ramage
Greg Hunt says the government will consider both proposals, and its full response would be revealed in the May budget. Picture: NCA NewsWire/Gary Ramage

"The full formal response to the commission will come during the course of the budget and all of those elements … will be covered as part of that."

National Seniors Australia chief advocate Ian Henschke said an increased Medicare levy may be the "quickest way" to pump much-needed money into the aged care sector.

But he warned safeguards needed to be put in place to ensure the money was not "chewed up" by administration fees.

"Let's just say $5 billion extra aged care and half of that gets goes straight through to the people that are running the care package. Is that worthwhile? No, it's not," he told Sky News.

"There should be a forensic analysis of how that money gets through to the care recipient."

Labor leader Anthony Albanese said the report, which found shocking levels of malnutrition in Australian aged care centres, was an "damning indictment" on the government.

"Whether it be the people who've died waiting for homecare packages or for people who are in residential aged care, what we need is proper funding, we need some real regulation and control, and we need to deal with workforce issues," he said.

"Quite clearly, the neglect that is there whereby we have elderly Australians who aren't getting the right nutrition, who aren't getting the right care, is an indictment."

Originally published as Why your tax bill could jump $610


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