Labor to back retaining budget fix levy

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Opposition Leader Bill Shorten has used his budget reply speech to call forthe tax to be limited to the top 20 per cent of Australian wage earners.

Mr Shorten said Labor would not stop the levy on Australia's five largest banks, which is expected to generate $6.2 billion over the next four years.

Days after delivering his own budget, Mr Morrison said the Labor leader's response on Thursday night didn't have any solutions for the nation.

He is, however, under pressure from the government to say if Labor will support a 0.5 per cent hike in the Medicare levy in two years' time, to help pay for the National Disability Insurance Scheme.

Deloitte partner David Watkins said people earning more than $100,000 comprised 18.3 per cent of the taxpayer population but would contribute nearly half the revenue from the extra Medicare levy.

Labor argues the NDIS was fully funded when it was in government but the government argues there is a $56 billion shortfall in funding over 10 years.

The deficit levy is due to expire on July 1, three years after its introduction by Joe Hockey, and applied an additional 2 per cent tax rate to people earning more than $180,000.

"Labor can not support making people on modest incomes give up even more of their pay packet", he said.

Chart comparing government spending

After the opposition hedged its position last week, Shorten has confirmed a Labor government would put an extra $22 billion into schools above the amount the government has pledged, going back to the original ALP plan. Labor would only support the levy rise for those in the top two tax brackets.

Mr Morrison has said he doesn't want a political fight over the funding.

But it was anxious that "the weakness of this government will turn $6 billion tax on the banks into a $6 billion charge on every Australian with a bank account or a mortgage".

Labor will propose to set a limit on how much people can deduct for managing their tax affairs of $3000. Although affecting only one in 100 taxpayers, this would save $1.3 billion over the medium term.

Thus, should these Budget measures get passed, high income earners will in fact receive a net 1.5% tax cut, whereas everyone else bar the lowest income taxpayers will be slugged with a 0.5% tax increase.

"Loopholes for millionaires means middle Australia pays more".

Finance Minister Mathias Cormann said Mr Shorten should release the costings of his announcement, arguing they would only increase the deficit.

Shorten said Labor would crack down tax evaders hiding funds in offshore accounts.

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