Australians may face one-time tax to pay for flood costs

Australians may be hit with a one-time “flood tax” to help pay for the damages wrought by the devastating floods in Queensland and Victoria.

According to press reports, economists estimate that the floods have cost at least $3-billion (Aus.) in lost exports of coal and agricultural production. In addition, the cost for rebuilding may require an additional $20-billion (Aus.)

But the final costs are still unknown. Earlier this month, Anna Bligh, the Premier of Queensland, said reconstruction costs in her province will carry a multi-billion dollar price tag.

Prime Minister Julia Gillard has floated the idea of the one-off tax, but also said she is committed to balancing the budget.

We don't have the total damage bill yet but I want to be very blunt with Australians - we have a lot of flood damage to repair in Queensland, there will be some economic effects on GDP growth, a short-term effect on inflation with food prices and the like, but our economy is strong and we will get through this by pulling together, she said on Australian television.

There will be spending cutbacks and there may also be a levy.

Tony Abbott, Leader of the Opposition in the Australian House of Representatives, has already attacked the tax proposal as unnecessary.

There's a right way and a wrong way to find that money, he said, citing that the government should reduce its own expenditures before passing on additional costs to taxpayers.