What's a debt levy? And what is it going to cost me?

It’s no secret that the Abbott government is interested in reducing Australia’s national debt. It’s what they ran (and arguably won) an election campaign on.

And the latest way the Federal government is rumoured to be tackling the nation’s debt in the upcoming Budget has ticked off a large proportion of the electorate.

And when you hear it – it’s not surprising why. A tax. A new tax. A tax from the government who promised to end all taxes.

Here’s what you need to know:

The Debt Levy (classed as the ‘Deceit Levy’ by Opposition Leader, Bill Shorten) is what they’ve come up with. It’s basically a quick cash booster to help the government solve a pressing problem.

A pressing problem Mr Abbott really, really, wants you to know about. “$25,000 per man, woman and child,” he emphasised on Fairfax Radio this morning. “It cannot be ignored. Debts at that level, they control you.”

According to the PM, those debts are currently sitting at around $667 billion. The proposed solution? To impose a debt levy.

The current plan is to impose the levy over the next four years.  It’s about all Australians (well at least those who earn a certain amount) lending a helping hand to pay down the national debt.

Those who would be hit the hardest would be high-income earners, currently comprised of those who earn over $80,000 per annum. Those who fall into this bracket would have an extra 1% of their income put towards the levy– on top of the taxes they already pay.  This works out to be around $29 extra a week for someone sitting on a $150,000 per annum salary.

The amount charged is higher for those earning over $180,000 every year. The government has proposed 2% of their salaries are contributed to the levy. This works out to be an extra $154 per week for those on $400,000 salaries.

Critics have claimed that such a levy would go against a key election promise made by the Prime Minister. Before the last election Mr Abbott stated, “We are about reducing taxes, not increasing taxes. We are about getting rid of taxes, not imposing new taxes”.

And a levy? Well, that’s basically a tax as far as your hip pocket is concerned.

Opposition Leader Bill Shorten has come out today criticising the proposed levy: “Not one single person voted for Tony Abbott at the election expecting an increase in their income tax but that’s exactly what they are getting after the election”.

However, when questioned about such backlash today, Mr Abbott denied he had been deceitful.

“I think if there was a permanent increase in taxation that would certainly be inconsistent with the sort of things that were said before the election,” he said.

In light of such statements, it’s no surprise that this new debt levy- which is essentially a tax, but just temporary- has got some people kind of annoyed.

Ultimately we will only be able to confirm what levy’s, tax increases or cutbacks the government is planning on introducing when the Federal Budget is released on the 13th of May.

Stay tuned folks. It could be an expensive one.

But, if this debt levy does indeed go ahead, what are your thoughts? Is it worth it to make sure we reduce our national debt? Are you bothered that the PM has broken an election promise?