Abbott faces growing opposition to 'deficit levy'

ONLY the top 10% of Australia's income earners will be hit with Prime Minister Tony Abbott's controversial "deficit levy", if he does not bow to growing opposition to the new tax.

Earlier this week Mr Abbott announced the levy would make Australians earning over $80,000 pay an extra 1% in income tax and those earning over $180,000 an extra 2% each year.

While he denied Opposition Leader Bill Shorten's claims the levy was a "broken promise", the Prime Minister is facing a growing backlash within the Coalition over the idea.

Mr Abbott has not specifically ruled it in or out of his government's first budget, due for release in two weeks, but used a special address to the conservative Sydney Institute to float the proposal.

He said at the time that "everyone will be involved, including high income earners such as members of parliament", in a bid to lend credence to Treasurer Joe Hockey's argument that all Australians must do the "heavy lifting".

But the latest household income distribution figures from the Australian Bureau of Statistics show the claim that the levy would affect high income earners is true.

The figures show that just over the top 10% of Australia's highest income earners earn above $80,000 a year - the cut-off point for entry into the top 10% in 2011-12 being earners on at least $80,860 a year.

Above that figure, where most of Australia's top income earners sit, are those who would be hit by the tax increase, from a floor of $800 a year for those on $80,000 a year.

Despite the levy proposal affecting mainly the nation's highest income earners, the Labor Opposition attacks on the "broken promise" have sparked the so-far anonymous outcry from Mr Abbott's backbench.

Whether the Prime Minister's proposal will actually be included in the coming budget, he said on Wednesday, would not be revealed until the budget is released on May 13.

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