Medicare levy hike to pay for the national disability insurance scheme The PM says the burden of the government's fiscal woes will be shared across the Australian community. THE average worker could be hit with an increased Medicare levy of about $300 a year in next month's budget to help pay for the national disability insurance scheme. The federal government is seriously considering increasing the Medicare levy from 1.5 to 2 per cent after Prime Minister Julia Gillard warned "urgent and grave" decisions were needed to cope with a $12 billion hit to tax revenue. The Daily Telegraph understands while the higher Medicare levy would be presented as a reasonable form of "insurance" to protect families from the huge costs of coping with a disability, no final decision has been made whether to include it in the May 14 budget. Ms Gillard will face attacks that it is another broken promise after she last year ruled out increasing the Medicare levy to pay for DisabilityCare. But the grim budget outlook has caused Labor to re-examine ideas previously ruled out, with a warning that all Australians must share the burden of budget cuts. "We need to have every reasonable option on the table to meet the needs of the times, even options previously taken off the table," Ms Gillard said. There are no easy choices. Ms Gillard vowed not to alter the GST or make further changes to superannuation. The opposition called on the government to come clean about what it was planning. A 0.5 per cent increase in the Medicare levy would raise an extra $3.2 billion a year. It would mean those earning $50,000 would pay about $250 a year more, on $75,000 it would be a $375 hike, while the slug would be $500 extra for someone on $100,000. Someone on $200,000 would pay $1000 more. Budget expert Chris Richardson from Deloitte Access Economics said increasing the Medicare levy would provide the government with much-needed money. "We do need to raise taxes and cut spending and this won't be the last of it," he said. Yesterday, as Ms Gillard said tough decisions had to be made, economists identified other targets for cuts, including scrapping first homeowners grants and the SchoolKids bonus along with reducing the threshold for Family Tax Benefit B grants and cuts to public servant staff levels. Mr Richardson said corporate welfare such as industry subsidies costing taxpayers about $18 billion a year were most likely to take a hit. "Labor is busily talking about new spending on schools and disability insurance, while the Coalition is talking about rolling back the carbon and mining taxes," Mr Richardson said. Both sides are still talking about extra costs. A freeze on the annual rises to pension and welfare payments - linked to inflation - is another radical suggestion. Shadow treasurer Joe Hockey said revenue was down but it would still grow by 7 per cent over last year.