Bills Digest 104 1995-96
Medicare Levy Amendment Bill 1996
WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments.
This Digest was available from 18 June 1996
CONTENTS
Date Introduced: 29 May 1996
House: House of Representatives
Portfolio: Treasury
Commencement: Apart from Schedule 1 and Schedule 2 the Act commences
on the date of Royal Assent. Schedule 1 commences on 1 July 1996. Schedule
2 commences on 1 July 1997.
The Medicare Levy Amendment Bill 1996 (the Bill) has two purposes:
- to increase the rate of Medicare levy for the 1996-97 financial year
in order to fund a firearms buy-back scheme;
- to make certain members of the Defence Force liable to pay part of
the full Medicare levy for the 1996-97 financial year in order to fund
a firearms buy-back scheme.
The Bill and the Income Tax Assessment Amendment Bill 1996 are part
of the Government's response to the killings at Port Arthur, Tasmania.
The Medicare Levy
The universal health insurance scheme known as Medicare was introduced
in February 1984. It is partly funded by a Medicare levy. 'The Medicare
levy is imposed on the taxable income of people who are residents of Australia
for income tax purposes and on certain trustees. The levy is also payable
by some trustees.'(1) Originally, the Medicare levy was set at 1% of taxable
income. However, the rate of levy has been increased three times - to
1.25% in 1986; to 1.4% in 1993 and to 1.5% in 1995.
Under the Medicare scheme, the levy is not payable by individuals whose
income falls below a certain level. Above that level, what are called
'shade-in' ranges apply.
Port Arthur and the Australasian Police Ministers' Council Resolutions
On 28 April 1996, 35 people were killed at Port Arthur, Tasmania. Reports
of the killing indicate that the suspect was using high powered semi-automatic
rifles with large capacity magazines.(2) Following this mass killing,
a meeting of the Australasian Police Ministers' Council (APMC) was convened
to discuss the implementation of uniform firearms laws in Australia.
On 10 May 1996, following the APMC meeting the Police Ministers issued
a communique detailing the agreement that had been reached between the
Commonwealth, the States and the Territories.(3) At the meeting, it was
agreed that the importation, ownership, sale, resale, transfer, possession,
manufacture and use of:
- military style centre-fire rifles;
- other self-loading centre-fire rifles;
- self-loading and pump-action shotguns; and
- self-loading rim fire rifles
would be banned.(4) Exceptions for a limited range of occupational and
official purposes were agreed to. The meeting also agreed on:
- a national integrated licence and firearms registration system to
be linked through the National Exchange of Police Information;
- licensing criteria for the ownership of firearms;
- a requirement for completion of an accredited course in safety training
for firearms for all first time applicants;
- uniform standards for the security and storage of firearms;
- a requirement that all firearms sales be conducted by licensed firearms
dealers,
- controls on the mail order sales of firearms;
- a 12 month firearms amnesty; and
- a public education campaign on the firearms amnesty and compensation
program.
Lastly, it was agreed that 'a common basis for fair and proper compensation,
based on the value of each firearm as at March 1996, be agreed between
jurisdictions to prevent gun owners from offering their firearms to the
State/Territory which offers the "best price."'(5) In other
words, it was proposed that gun owners be compensated for weapons handed
in during the amnesty period. However, the APMC meeting did not agree
on how the buy-back scheme would be funded.
On 14 May 1996, the Prime Minister stated that he was writing to all
Premiers and Chief Ministers to inform them that the Commonwealth was
prepared to fund the direct cost of the buy-back scheme.(6)
The Prime Minister's Second Reading Speech for the Bill states that
'Through a one-off increase of 0.2% in the Medicare levy, these Bills(7)
will raise the necessary funds to re-imburse States and Territories for
the direct costs of payments they will have to make to relevant gun owners.'
He continued, 'The figure of $500 million [which will be raised by the
adjustment to the levy] represents the best advice about the cost States
and Territories could face in meeting the direct cost of "buy back"
arrangements. Any surplus will be returned to taxpayers through the Medicare
levy system.'
Schedule 1 - Amendments commencing on 1 July 1996
Item 1 of Schedule 1 of the Bill amends the rate of Medicare
levy payable on taxable income set out in section 6 of the Medicare
Levy Act 1986 (the Act) from 1.5% to 1.7% - an increase of 0.2% in
the rate of Medicare levy. This amendment applies to individuals and certain
trustees of trust estates.
Items 2 & 3 of Schedule 1 amend subsection 8(2) of the Act
to make adjustments to the formula contained in the Act which relates
to married persons or sole parents whose income is just above the Medicare
exemption level. This will ensure that the 'shading in' of the levy will
continue to apply.
Item 4 of Schedule 1 inserts new section 8A into the Act.
The effect of new section 8A will be to make certain members of
the Defence Force and their relatives and associates liable for an amount
of Medicare levy for the 1996-97 financial year. At present, Defence Force
personnel, relatives and associates are exempt from the Medicare levy
as they receive free medical treatment due to their employment. The Bill
imposes a levy on them of 0.2% of the Medicare levy. According to the
Prime Minister's Second Reading Speech, 'This measure puts Defence personnel
in the same position as other Australians required to meet this special
community-wide impost.'
Item 6 of Schedule 1 provides that the amendments made by the
Schedule apply during the 1996-97 financial year.
Schedule 2 - Amendments commencing on 1 July 1997
Item 1 of Schedule 2 adjusts the rate of Medicare levy in section
6 of the Act from 1.7% to 1.5%. In other words, it returns the rate of
levy to the pre-1 July 1996 rate.
Items 2 and 3 of Schedule 2 make adjustments to the formula for
certain income earners whose income is just above the Medicare exemption
level to return the formula to its pre-1 July 1996 state.
Item 4 of Schedule 2 repeals new section 8A of the Act
from 1 July 1997. In other words, from 1 July 1997, certain members of
the Defence Force, their relatives and associates will once again be totally
exempted from the Medicare levy.
Item 6 of Schedule 2 states that the amendments made by the Schedule
apply for the 1997-98 financial year and for successive financial years.
(1) Mackey, P & Winter, G 'The Medicare Levy: Rationale and Revenue,'
Parliamentary Research Service, Research Note No.42. June 1995,
p.1.
(2) See Norberry, J; Woolner, D & Magarey, K 'After Port Arthur
- Issues of Gun Control in Australia', Parliamentary Research Service,
Current Issues Brief No.16 1995-95.
(3) Australasian Police Ministers' Council, Special Firearms Meeting.
Resolutions, Canberra, 10 May 1996.
(4) Prime Minister, 'Gun control [and] Australasian Police Ministers'
Council Special Firearms Meeting, Canberra, 10 May 1996: Resolutions,'
Press Release, 10 May 1996.
(5) APMC, op.cit, item 11.
(6) Prime Minister, 'Funding of gun "buy back" scheme,' Press
Release, 14 May 1996.
(7) This is a reference to the Bill and the Income Tax Assessment Amendment
Bill 1996.
Jennifer Norberry ph 06 277 2476
17 June 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other sources should
be consulted to determine whether the Bill has been enacted and, if so,
whether the subsequent Act reflects further amendments.
PRS staff are available to discuss the paper's contents with Senators
and Members and their staff but not with members of the public.
ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library, 1996.
This page was prepared by the Parliamentary Library, Commonwealth of
Australia
Last updated: 24 June 1996
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