'Deficit levy' would be a broken promise from Tony Abbott, Labor warns

Labor has warned a “deficit levy” would define Tony Abbott as a Prime Minister if he pursued the new tax and  says the government was paying the price for the “deceitful, voodoo economics” of its election campaign.

Mr Abbott has not ruled out a short-term tax on high incomes to  reduce Australia’s deficit, as the opposition accused the the Coalition of preparing to break an election promise of no new taxes.

The Australian Financial Review is also reporting that business and industry leaders are urging the government not to raise taxes to reduce debt.

Mr Abbott on Sunday refused to comment about speculation the government was preparing to introduce the levy on high incomes but said the government would not “squib on the challenge” of addressing “debt and deficit stretching out as far as the eye can see”.

“We are going to do it in ways which are faithful to the commitments that we made to the Australian people, but we are not going to squib the challenge,” he said.

“We are attracted to good economic policy and the reason why you’ve got to fix the budget is because you can’t have in the long run a strong economy without also having a strong budgetary position.”

But Opposition Leader Bill Shorten attacked the Abbott government, accusing them of reneging on promises made before the election.

"They've doubled the deficit, now because they've doubled the deficit they want all Australians to pay a deceit tax," he told reporters in Brisbane.

''Here's a couple of ideas for Joe Hockey and Tony Abbott - don't break your promise . . . don't say nine times in a 32-day election period when you're chasing people's vote that they won't touch pensions and then as soon as you get elected have twisted priorities and broken promises and introduce a new deceit tax.''

Mr Shorten also criticised the Abbott government over speculation of changes to the aged pension, saying the pension was not a ''king's ransom or like winning lotto''.

''The fact they're letting these rumours, this fear, run tells me that the Abbott government is using the Australian people to scare them, to prepare the ground for unpleasant, unnecessary decisions,'' Mr Shorten said.

Shadow treasurer Chris Bowen said earlier on Monday that the government was preparing to breach its election promises.

“This is the deceitful, voodoo economics of Tony Abbott and Joe Hockey from before the election catching up with them,” Mr Bowen told ABC Radio.

“They said they could introduce a budget surplus while cutting taxes and having no spending cuts over and above those announced.

“It was always fallacious and it’s been shown to be so now.”

Labor’s family and payments spokeswoman Jenny Macklin warned on Monday that imposing a levy would define Mr Abbott’s leadership.

“He was quite adamant about it, just like he said there would be no changes to pensions, he said there’d be no new taxes,” she told Radio National.

“So, you’d have to wonder how many promises Tony Abbott could break.

“This will define Tony Abbott if he goes ahead and introduces a new tax.”

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The story 'Deficit levy' would be a broken promise from Tony Abbott, Labor warns first appeared on The Sydney Morning Herald.

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