National disability insurance scheme funding: the case for hypothecation
In 2011, the Productivity Commission released a report on the design of a National Disability Insurance Scheme. Subsequent to that report, the Commonwealth has moved to establish such a scheme with partial funding from an increase in the Medicare levy. However, the Medicare levy is a relatively inefficient funding source and does not address the key incentive issues facing the scheme. This article examines the use of a fully hypothecated tax instead and concludes that it would probably be a superior alternative.
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