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Tax boost announced for 1.2 million people

<p>Low-income earners will receive a tax boost with the Medicare levy threshold set to rise. </p> <p>The income threshold at which taxpayers will have to pay a two per cent Medicare levy will increase by 7.1 per cent, in line with inflation. </p> <p>Currently single people who earn below $24,276 do not have to pay the levy. Under the changes, the two per cent levy only has to be paid by anyone earning over <span style="font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;">$26,000</span></p> <p>The <span style="font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;">Medicare levy </span><span style="font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;">threshold for seniors and pensioners will increase to $41,089, up from the initial benchmark of $38,365. </span></p> <p>For families, this threshold has increased to $43,486 up from the previous $40,939. </p> <p>Treasurer Jim Chalmers said that the increase was part of the broader measures taken to relieve the increase in cost-of-living. </p> <p>“This will ensure people on lower incomes continue to pay less or are exempt from the Medicare levy,”  he said on Tuesday. </p> <p>“It means 1.2 million Australians get to keep a bit more of what they earn.”</p> <p>The boost in the Medicare levy threshold was announced alongside changes to income tax cuts, with those earning under $150,000 set to receive greater benefits. </p> <p>“This is about doing what we responsibly can to ease some of the pressure being felt by Australians right around the country, but especially for people on lower incomes, young people, seniors and women,” Chalmers said.</p> <p>This comes just days after Medicare celebrated it's 40th anniversary, with an exhibition launched at Parliament House.</p> <p><em>Image: Getty</em></p>

Money & Banking

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Research shows banks will pass levy onto customers

<h1><strong style="font-size: 10px;">Written by </strong><a style="font-size: 10px;" href="https://theconversation.com/profiles/fabrizio-carmignani-4375">Fabrizio Carmignani</a><span style="font-size: 10px;">, </span><em style="font-size: 10px;"><a href="http://theconversation.com/institutions/griffith-university-828">Griffith University</a></em><span style="font-size: 10px;"> and </span><a style="font-size: 10px;" href="https://theconversation.com/profiles/ross-guest-13155">Ross Guest</a><span style="font-size: 10px;">, </span><em style="font-size: 10px;"><a href="http://theconversation.com/institutions/griffith-university-828">Griffith University</a></em></h1> <p>Studies of European countries show that bank taxes similar to the <span style="text-decoration: underline;"><strong><a href="https://theconversation.com/budget-bank-levy-too-big-to-fail-not-too-big-to-take-a-hit-77475">0.06% bank levy</a></strong></span> introduced by the government in the 2017 federal budget will be largely borne by customers, not shareholders. <img width="1" height="1" src="https://counter.theconversation.edu.au/content/77782/count.gif?distributor=republish-lightbox-basic" alt="The Conversation"/></p> <p>The levy could also make the banking system more, rather than less risky. The fact that a bank is asked to pay the levy is a confirmation that it is “<span style="text-decoration: underline;"><strong><a href="https://theconversation.com/au/topics/too-big-to-fail-3747">too big to fail</a></strong></span>”. This could in turn encourage riskier behaviour. The levy might also trigger a higher probability of default by reducing a bank’s after-tax profitability</p> <p>But it is difficult to say whether banks will pass the levy on to customers by increasing their loan rates, fees or both.</p> <p>In its response to the levy, NAB confirmed <span style="text-decoration: underline;"><strong><a href="http://nabnews.efront-flare.com.au/wp-content/uploads/2017/05/NAB-response-to-Dept-of-Treasury-Major-Bank-Levy.pdf">it will not just be borne by shareholders</a></strong></span>:</p> <blockquote> <p>The levy is not just on banks, it is a tax on every Australian who benefits from, and is part of, the banking industry. This includes NAB’s 10 million customers, 570,000 direct NAB shareholders, those who own NAB shares through their superannuation, our 1,700 suppliers and NAB’s 34,000 employees. The levy cannot be absorbed; it will be borne by these people.</p> </blockquote> <p>Aware of this problem, the government <span style="text-decoration: underline;"><strong><a href="http://sjm.ministers.treasury.gov.au/media-release/044-2017/">has asked the Australian Competition and Consumer Commission</a></strong></span> (ACCC) to undertake an inquiry into residential mortgage pricing. The ACCC can require banks to explain changes to mortgage pricing and fees.</p> <h2>When banks pass on these taxes</h2> <p>The bank levy is similar to taxes recently introduced by some G20 economies, <span style="text-decoration: underline;"><strong><a href="http://www.nortonrosefulbright.com/knowledge/publications/32128/introduction-to-the-uk-bank-levy">including the UK</a></strong></span>. These had the dual purpose of raising revenues and stabilising the balance sheets of large banks in the aftermath of the global financial crisis.</p> <p><span style="text-decoration: underline;"><strong><a href="http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Events/conferences/2015/Doctoral_mtg_2015/kogler-paper.pdf">An analysis of bank taxes</a></strong></span> in the UK and 13 other European Union countries shows that the extent to which taxes are passed on to customers depends on how concentrated the banking industry is.</p> <p>The more the industry is dominated by a small number of banks, the greater the share of the tax that is passed on to customers and the less that is borne by shareholders. In more concentrated industries customers have relatively fewer alternative options and therefore tend to be less mobile across banks. This in turn gives the large banks greater market power to increase interest rates and fees without losing customers.</p> <p>Australia’s banking industry is quite concentrated. In fact, we’re <span style="text-decoration: underline;"><strong><a href="https://www.rba.gov.au/publications/confs/2007/pdf/davis.pdf">around the middle of the pack of OECD countries</a></strong></span>, much higher than the US, but lower than some European countries. From this we can surmise that at least some of the cost of the bank levy here will be passed on to borrowers through higher loan rates, fees or both.</p> <p>An <span style="text-decoration: underline;"><strong><a href="https://www.imf.org/external/np/seminars/eng/2010/paris/pdf/090110.pdf">IMF study of G20 countries</a></strong></span> suggests that a levy of 20 basis points (i.e. 0.2%, approximately three times higher than the Australian government’s bank levy), could lead to an increase in loan rates of between 5 and 10 basis points. This means that the monthly repayment on a loan (assuming an initial rate of 5.5%) would increase by approximately A$6 for every A$100,000 borrowed.</p> <p>The IMF also found that the bank levy doesn’t just hit customers. A 0.2% levy would reduce banks’ asset growth rate by approximately 0.05% and permanently lower real GDP by 0.3%.</p> <h2>The impact on customers</h2> <p>If the banks pass on the levy to customers then it becomes just another indirect tax, similar to the GST. The question then is whether this is regressive - does it have a greater impact on those on lower incomes than higher incomes.</p> <p>Lower income earners are likely to borrow less than higher income earners. However, lower income earners are also less able to bear an interest rate increase. They are also more likely to be excluded from borrowing when the cost of borrowing increases.</p> <p>In this sense, then, if the bank levy is passed on to customers it could become a barrier to home ownership for some lower income borrowers.</p> <p>More generally, if the value of bank transactions is a higher proportion of low incomes than of high incomes, then the bank levy would operate as a regressive tax and contribute to sharpening (rather than smoothing) inequalities.</p> <p>Both of these would be unintended, but undesirable, consequences of the levy.</p> <p><em><strong><a href="https://theconversation.com/profiles/fabrizio-carmignani-4375">Fabrizio Carmignani</a>, Professor, Griffith Business School, <a href="http://theconversation.com/institutions/griffith-university-828">Griffith University</a> and <a href="https://theconversation.com/profiles/ross-guest-13155">Ross Guest</a>, Professor of Economics and National Senior Teaching Fellow, <a href="http://theconversation.com/institutions/griffith-university-828">Griffith University</a></strong></em></p> <p><em><strong>This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/research-shows-the-banks-will-pass-the-bank-levy-on-to-customers-77782">original article</a>.</strong></em></p>

Money & Banking

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NSW Government to introduce new levy from July 1

<p>As part of reforms to the fire and emergency services levy, NSW property owners are about to be hit with an extra $185, on average, in levy fees.</p> <p>From July 1, 2017, the start of the new financial year, landowners will pay the new levy as part of their council rates. Currently, three-quarters of the annual $950 million cost of the emergency services is funded by tax imposed on insurance companies, which is passed on to customers via higher premiums. The rest is funded by the state and a tax on councils.</p> <p><strong><a href="https://www.emergency.nsw.gov.au/media-releases/2015/nsw-moves-to-a-fairer-system-for-funding-fire-and-emergency-services.html" target="_blank">In a statement, Emergency New South Wales</a></strong> said the new system would make it fairer for everybody, as those who are insured will no longer be supporting those who are not insured. The new system will be charge all landowners in NSW with an annual levy.</p> <p>NSW premier Gladys Berejiklian said, "Fire does not discriminate and the community rightly expects that firefighting and SES services will be available to everyone in their time of need. It is also fair to expect all property owners to pay their share for these vital services.”</p> <p>However, for those who currently hold <a href="http://www.oversixty.com.au/finance/insurance/home-and-contents/" target="_blank"><span style="text-decoration: underline;"><strong>home and contents insurance</strong></span></a> this could result in savings as insurers lower premiums. The state government estimates the savings could be <strong><a href="https://www.emergency.nsw.gov.au/media-releases/2015/nsw-moves-to-a-fairer-system-for-funding-fire-and-emergency-services.html" target="_blank">about $47 a year</a>.</strong></p> <p>From May 1, you will be able to calculate your required contribution on the <strong><a href="http://emergencyservicespropertylevy.nsw.gov.au/" target="_blank">Fire and Emergency Services Levy</a></strong> website.</p> <p><strong>Related links:</strong></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/retirement-income/2017/01/expenses-disrupting-your-retirement-budget/">4 expenses that will disrupt your retirement budget</a></em></strong></span></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/retirement-income/2017/02/pension-changes-could-prompt-financial-risk-taking/">Pension changes could prompt financial risk taking</a></em></strong></span></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/retirement-income/2017/02/retirement-in-the-age-of-financial-uncertainty/">Retirement in the age of financial uncertainty</a></em></strong></span></p>

Money & Banking

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Calls for Medicare levy exemption to be dropped

<p>The Australian Council of Social Services (ACOSS) is calling on the Federal Government to abolish the Medicare levy exemption, in a move that would raise $4 billion a year.</p> <p>The idea, spouted in a budget submission from the advocacy group, would see high-income earners slugged with an extra $900 charge a year. At present, only high-income earners without private health insurance are made to pay the levy.</p> <p>ACOSS believes high income earners should be able to afford the levy, and as such should pay it, suggesting the removal of the exemption would be “highly progressive”.</p> <p>The ACOSS budget submission reads: “Only families in the top 20 per cent of households earning over $180,000 would be affected, paying an extra 1.5 per cent of their income.</p> <p>“Among single people without children, only those in the top three quintiles would be affected and the impact would rise with income. A single person earning $90,000 would pay $900 a year more, a single person earning $130,000 would pay $1,625 more and a single individual earning $280,000 would pay $4,200 more.”</p> <p>ACOSS CEO Dr Cassandra Goldie believes extra funds generated by these measures should be directed towards the National Disability Insurance Scheme.</p> <p>Dr Goldie told <span style="text-decoration: underline;"><em><strong><a href="http://www.News.com.au" target="_blank">News.com.au</a></strong></em></span>, “We propose that the Levy be further strengthened to help pay for health, aged care and disability services, by removing the exemption for those holding private health insurance from the Medicare Levy surcharge. We estimate this would raise $4 billion.</p> <p>“We can improve the effectiveness of health spending by dropping the Private Health Insurance Rebate and investing more in preventive health services instead of waiting until people need to use hospitals.”</p> <p>What’s your take on this suggestion? Is it unfair to target high income earners, or would this be an easy quick fix that could generate real wins for the budget?</p> <p>Let us know in the comments. </p> <p><strong>Related links:</strong></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/money-banking/2017/02/pm-donated-almost-2-million-to-election-campaign/">PM accused of “buying” the election</a></em></strong></span></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/money-banking/2017/02/prime-minister-malcolm-turnbull-to-scrap-major-political-entitlement/">Prime Minister Malcolm Turnbull to scrap major political entitlement</a></em></strong></span></p> <p><span style="text-decoration: underline;"><strong><em><a href="http://www.oversixty.com.au/finance/money-banking/2017/02/centrelink-staff-set-to-strike/">Centrelink staff prepare for major strike</a></em></strong></span></p>

Money & Banking

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Google and Levi’s create jacket for cyclists

<p>It's been a year since Google first announced its partnership with Levi's, but only now are the fruits of their collaboration starting to materialise.</p> <p>As part of this year's I/O conference, the companies unveiled the first piece of connected clothing powered with Jacquard by Google technology: A Levi's trucker jacket made specifically for commuting bikers.</p> <p>Woven into one of the sleeves is a patch of conductive fibres-so subtle you can barely tell it's there-that lets you tap or swipe across its surface and toggle a series of customisable commands, from silencing calls to querying Google Maps for directions.</p> <p>The tech components are twofold. The metal-based conductive fibres are fully washable and sewed into the denim, and a button-sized piece of removable hardware called the "smart tag" allows the jacket to connect to your phone or tablet via Bluetooth.</p> <p>Gesture controls and specific functions can be customised with the help of a companion app, but there's no word yet as to whether that app will be immediately available for non-Android users.</p> <p>Among the tasks the jacket can perform: offering up suggestions for nearby coffee shops (or other types of venues), providing an ETA to your destination, and changing tracks on your playlist. </p> <p>All of the info is conveyed by audio, so you're not distracted by screens. By next year, Google will release further details on battery specs and whether smart tags can be interchanged between garments; those logistics and the jacket's price are still in the works.</p> <p>Though Levi's is Google's first Jacquard partner, the platform will ultimately be open to third party designers and app developers-just like Google's smartwatch line, Android Wear.</p> <p>The conductive fibres that power Jacquard are compatible with any commercial loom, which means that any designer of textile-based products will easily be able to incorporate the technology into their wares. In other words: clothing is just the beginning, and furniture may well be up next.</p> <p>Watch the video above to see how it works. Do you think it would be useful? Let us know in the comments below.</p> <p><em>Written by Nikki Ekstein. First appeared on <a href="http://Stuff.co.nz" target="_blank"><strong><span style="text-decoration: underline;">Stuff.co.nz</span></strong></a>.</em></p> <p><strong>Related links:</strong></p> <p><a href="/lifestyle/beauty-style/2016/05/coat-with-in-built-heating/"><strong><em><span style="text-decoration: underline;">The winter coat with in-built heating</span></em></strong></a></p> <p><a href="/entertainment/technology/2016/04/how-to-plan-public-transport-journey-using-google-maps/"><em><strong><span style="text-decoration: underline;">How to plan your public transport journey using Google Maps</span></strong></em></a></p> <p><a href="/health/hearing/2016/04/worlds-most-expensive-headphones/"><strong><em><span style="text-decoration: underline;">The headphones that cost $75,000</span></em></strong></a></p>

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