The Australian government yesterday proposed a new tax to partially recoup more than US$5 billion it expects to spend on rebuilding after widespread flooding that could prove to be the country’s costliest natural disaster.
Australian Prime Minister Julia Gillard announced that the temporary tax would apply to Australians with above-average incomes and raise US$1.8 billion to pay for massive destruction from weeks of flooding in eastern Australia.
A vast inland sea of floodwaters continued creeping across southeastern Australia yesterday, inundating farms and houses.
The flooding has claimed 35 lives, damaged or destroyed 30,000 homes and businesses and caused at least US$3 billion in damage to crops and lost coal exports.
Initial estimates of the overall damage plus the cost of emergency grants to flood-affected communities for the federal government is US$5.6 billion and likely to rise, Gillard said.
The federal government is to pay 75 percent of the cost of rebuilding infrastructure such as roads and ports, while state and local governments will pay 25 percent.
The federal government plans to cut spending in other areas, including clean energy industry incentives, to make up the remainder of the bill for infrastructure.
“In time, it may prove to be the most expensive natural disaster our nation has ever seen,” Gillard said.
She said the government expected the floods to shave half a percentage point from Australia’s GDP, which the government predicted in November would grow by 3.25 percent in the current fiscal year ending June 30.
The legislation is to be introduced in parliament next month. The main opposition party opposes it, but the measure seems likely to pass because Gillard’s Labor Party commands a majority in the House of Representatives with the support of three independent lawmakers plus one from the minor Greens party.
Gillard, whose government has vowed to make Australia one of the first developed countries to return its annual budget to surplus two years after the global economic crisis, has dismissed the prospect of borrowing to pay for the flooding damage.
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