There has been an acquiescence of much of the media to spin from Labor about its proposed 0.5 percentage point increase to the medicare levy to ‘fund’ the NDIS. The spin suggests that opposing the levy – opposing the tax – is immoral.
Conflating support for a program (the NDIS) and the financing of the program (a tax increase) is problematic itself. But it is outrageous to imply impure motives to those who oppose either (or both) the NDIS (including its present design) and the financing method.
Morality is for individuals – it is what we do with our own resources and how we behave and act under various pressures. There are many valid objections to the NDIS in principle, many more valid objections to the likely implementation of the NDIS and many objections to the financing method.
It is not immoral to oppose any of these proposals – indeed it could well be the most moral and courageous course.
I think it is immoral to deliberately mislead citizens into thinking that a 0.5 percentage point increase to the medicare levy is sufficient to fully fund the proposed NDIS. If the NDIS is so vital, and a hypothecated tax (which is in any case invalid under the Constitution) so important, why should it not be set at the level to fully fund the scheme? Recent evidence from George Mason university suggests that hypothecated taxes have a number of undesirable properties including: masking increases in government spending, increasing the total size of government, and reducing incentives for improving the efficiency of the programs tied to the hypothecated tax.
The medicare levy itself is highly problematic. Many people think it finances health expenditure, when in fact it only provides for a small fraction of health expenditure. This creates the expectation that people have ‘paid’ for their health costs through the levy, reducing the public’s scrutiny of the efficiency, effectiveness and efficacy of public health expenditure.
Additionally the medicare levy is not deductible. It sits atop the marginal tax rates, increasing directly the effective marginal tax rate. An additional 0.5 percentage point increase to the levy will reduce the efficiency of this tax further and create additional incentives for people to disguise (or reduce) their reported gross income.