CANBERRA, Australia (AP) — Australian lawmakers on Wednesday narrowly approved tax hikes for the wealthy that will help the government meet its pledge to deliver a budget surplus next year.
The legislation will limit the availability of a 30 percent tax rebate on health insurance premiums to lower- and middle-income earners. Currently all taxpayers can claim the rebate. But from July 1, individuals earning more than 129,000 Australian dollars ($137,800) a year and couples with joint incomes exceeding AU$258,000 will no longer be eligible. They are expected to pay, respectively, around AU$500 and AU$1,000 extra a year on average.
The cap will cost wealthy earners a total of AU$2.4 billion over three years.
The bill scraped through the House of Representatives on Wednesday by 71 votes to 70. It is assured passage through the Senate early this year with the guaranteed support of the center-left Labor Party government senators and those from the minor Greens party.
Tony Abbott, leader of the conservative opposition coalition, accused the government this week of playing the "politics of the class war" by increasing the tax burden on the wealthy.
He warned that wealthy people would give up their private health insurance and add pressure on the public health system. Currently 45 percent of Australians hold private health insurance.
But Health Minister Tanya Plibersek said the current rebate system was not fair to poorer Australians.
"I don't want a situation where the people who sit (in parliament) ... have their private health insurance subsidized by the people who clean this chamber at night," Plibersek told the House of Representatives.
The government announced in November last year that it will deliver a narrow surplus of AU$1.5 billion in the next fiscal year beginning July 1, 2012, despite the European debt crisis slashing revenue by AU$20 billion over four years, mainly through lower company tax yields.
The new surplus target is AU$2 billion less than the government had forecast in May 2011 due to the country's deteriorating finances.
The health-insurance rebate cut is the latest of several tax increases.
In July 2011, the government introduced a temporary tax to help pay the multibillion-dollar damage bill left by record floods and storms. The levy — 0.5 percent on incomes between AU$50,000 and AU$100,000, and a 1 percent on taxable incomes above that — was expected to raise AU$1.8 billion.
From July 2012, the government will place a new 30 percent tax on big mining companies whose profits have boomed largely due to Chinese demand for iron ore and coal. The tax is expected to raise almost AU$9 billion in three years.
Revenue raised from a carbon tax, which will also be imposed on Australia's largest greenhouse gas-polluting companies beginning in July, will be paid back to low-income earners as compensation for higher prices, and spent on industry assistance to help businesses adapt to a lower-carbon economy.