Deficit tax plan stuns nervous western Sydney Liberals

Senior Liberals have described plans for a possible deficit tax in the budget as ‘‘electoral suicide’’.

Some talked of a party-room revolt and one warned the Prime Minister Tony Abbott would wear the broken promise as ‘‘a crown of thorns’’ if the government decided to go through with it.

The figure, part of Mr Abbott’s ministerial team, spoke on condition of anonymity, arguing the suggestion of a tax was one that could come to ‘‘haunt’’ Mr Abbott’s entire prime ministership.

‘‘I worry that this is Tony’s Gillard moment, when she announced the carbon tax,’’ the senior Liberal said.

Several other Liberals also expressed dismay at the prospect of a government, elected to restore trust to politics, overturning a ‘‘crystal-clear’’ policy commitment of no new taxes, in its first budget.

Incredulous Liberals contacted by Fairfax Media said they had been given nothing to tell voters who were beginning to call electorate offices to complain.

The mood in government-held marginal seats was particularly febrile. One MP revealed that neither he nor his colleagues had been warned about the tax.

A number of western Sydney Liberal MPs had been calling each other on Tuesday morning ‘‘to lend each other support’’. Constituents had been phoning electorate offices wondering what the tax would mean for their families, a Coalition MP said.

One Liberal MP said he woke on Tuesday morning to the news of the tax.

‘‘It’s just shock,’’ the MP said. ‘‘There was no communication from the leader’s office. We’re all just scratching our heads. It’s the biggest f---up we’ve had in a long time.’’

‘‘I can’t say anything on the record because it’s just too stupid,’’ he said. ‘‘If it’s wrong, then it’s bulls--t, because why would you scare the electorate? And if it’s right, then it’s even worse because we said before the election there’d be no new taxes.’’

Another branded Mr Abbott’s attempts to recategorise the tax as a levy as "sophistry", calling it "an offence to voters" that was "worse than Gillard’s claim that the carbon tax was not a tax". 

Mr Abbott gave further impetus to reports of the tax, being called a ‘‘levy’’ by the government, including details that it would cut in with a 1 per cent pre-tax levy on the pay of people earning more than $80,000 a year, rising to 2 per cent for those earning more than $180,000.

Reports claimed the government was preparing a sliding scale of taxes that would result in a $800-a-year impost on incomes of $80,000 a year rising to $4000 for someone on $200,000 a year and twice that for someone on $400,000.

However, government insiders said on Tuesday those income brackets and their method of application did not reflect any of the options before the government as it put the final touches on the budget.

The sources said it was likely the scales would be progressive, meaning people would pay the tax on dollars earned only in higher brackets and would not be taxed twice.

In pre-budget interviews, Mr Abbott justified what would be a clear broken promise of no new taxes and no excuses, by arguing the tax was needed and was not a tax because it was not permanent.

Before the election last year, Mr Abbott said there should be no new taxation collected without an election. Now that has changed.

‘‘I think if there was a permanent increase in taxation that would certainly be inconsistent with the sort of things that were said before the election,’’ Mr Abbott said.

‘‘We want taxes going down not going up, but when you’re in a difficult position, sometimes there needs to be some short-term pain for some long-term gain.’’

While some ministers defended the ‘‘temporary’’ deficit tax as proof the government was serious about getting the budget back into balance, others said they were astounded, admitting their party had no mandate for the tax because they had specifically campaigned against such measures and had shown their attitude by voting against the Queensland flood and cyclone levy.

There were serious doubts also as to whether the legislation to enact the tax increase could clear the Senate before June 30 because the Greens and Labor said they would block it.

Labor leader Bill Shorten left little hope for the government on that score, calling it bad policy. ‘‘But we will fight a tax increase on ordinary Australians,’’ he said. ‘‘Labor will have no part of it. No amount of weasel words by Tony Abbott and his Liberal government can change the truth.

‘‘A tax increase is a tax increase is a tax increase’’

He predicted the government would ‘‘fold’’ on the plan before the budget once it saw the ferocity of voter reaction.

Greens leader Christine Milne said her party would not support the proposal.

‘‘There is absolutely no way the Prime Minister should be trying to persuade Australians that the big miners shouldn’t have to pay a profits tax but the community should make up the difference,’’ she said.

‘‘We will not support [Mr Abbott’s] deficit levy.’’

The story Deficit tax plan stuns nervous western Sydney Liberals first appeared on St Marys-Mt Druitt Star.

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