Australia unveils tax to recoup flood costs

Australia's government proposed a new tax yesterday to partially recoup the more than £3.5 billion it expects to spend on rebuilding after widespread flooding that could prove to be the country's costliest natural disaster.

Prime minister Julia Gillard announced the temporary tax would apply to Australians on above-average incomes and raise A$1.8bn (1.13bn) to pay for massive destruction from weeks of flooding in eastern Australia.

The one-year tax, which is to start on 1 July, will affect those earning A$50,000 (about 31,500) or more. Those affected by floods would not pay.

"We should not put off to tomorrow what we are able to do today," Ms Gillard said.

A vast sea of floodwaters continued to creep across southeastern Australia yesterday, inundating farms and houses. Dozens of homes were swamped this week. The disaster has claimed 35 lives, damaged or destroyed 30,000 homes and businesses, and caused at least A$3bn in damage to crops and lost coal exports.

The overall cost of damage plus emergency grants for the federal government was A$5.6bn and likely to rise, Ms Gillard said. The federal government will pay 75 per cent of the cost of rebuilding infrastructure such as roads and ports, and state and local governments 25 per cent.

The federal government plans to cut spending in other areas, including clean energy industry incentives, to help pay the infrastructure bill.

"In time, it may prove to be the most expensive natural disaster our nation has ever seen," Ms Gillard said.

The legislation is to be introduced to parliament next month. The main opposition party opposes it, but the measure seems likely to be passed.