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Australia considers tax levy for flood damage

Australia's government is reportedly considering a taxpayer levy to help pay for massive flood rebuilding, while preserving the budget's path back to surplus in 2012-13, as one major bank warned yesterday the damage bill could reach $20billion

A levy could take the form of an addition to the 1,5percent Medicare levy backing public health and hospitals, and which raises $10billion a year, The Australian newspaper said.

Flooding blamed on rains triggered by a La Nina weather pattern in the Pacific has devastated huge areas of Australia's eastern seaboard, flooded parts of Brisbane, shut vital coal mines and rail lines and destroyed crops.

Rebuilding estimates from banks and economists have mostly ranged from about $3billion to $10billion, but illustrating the uncertainty ANZ Bank warned it could come in at close to double that when floodwaters subsided and the full scale of the devastation became clear.

A spokesperson for Treasurer Wayne Swan said it was too early to speculate how the government would assist flood victims, but prime minister Julia Gillard said the government's obligations to help Queensland would be part of the planning for the 2011-12 budget, to be unveiled on May 10.

Australia's CommSec, the investment arm of Commonwealth Bank, said economists were tending to overestimate the economic and financial impact, with activity to be boosted in the longer term and the cost in the realm of $3billion to $5billion.

The floods, which have so far killed 24 people with 12 still missing, have been blamed on the strongest ever recorded La Nina, which brought Australia its third wettest year on record in 2010, covering an area the size of South Africa.

  • Meanwhile in Colombo, hundreds of Sri Lankan flood victims stormed a government office in one of the hardest hit areas to demand that aid be distributed, police said.

Flooding across the island nation last week killed at least 40 people and left 51400 people in temporary shelters and threatening Sri Lanka's staple rice crop.

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