Now Tony Abbott has his own great big new tax and it’s a belter.

Slugging medium and large businesses to the tune of $2.7b a year dwarfs the cost of the CPRS on business. The CPRS actually hands money from taxpayers to businesses for its first five years, costing the Budget over $4b.  Thereafter, it turns revenue-positive, but only reaches $740m in 2019-20. It’s not until the mid-2020s that the CPRS finally cancels out the early generosity to business and becomes a net tax.

Over the same period, Abbott’s parental leave scheme would cost over $31b.  It’s not just bigger, but bigger by several orders of magnitude.

Don’t forget that the Government’s scheme is also funded by taxpayers; it’s just that Abbott has told a specific and vocal minority of taxpayers that they’ll have to pay extra for his version.

Exactly who those companies are, though, isn’t clear: in his announcement, Abbott said it was businesses with a taxable income over $5m a year. Later it was companies that paid tax of over $5m a year.

On average, each of the medium and large businesses hit by Abbott’s tax will have to around $800,000 to $900,000 in extra tax a year. Obviously, the larger the business, the greater the slug. If that doesn’t sound too much, it means about six workers in each business, across more than 3,000 businesses.

There’s some policy rationale for this: business is a prime beneficiary of a parental leave policy, because it increases the participation rate by encouraging more women to remain in the workforce, reducing wage pressures and expanding the skills available to employers. But those benefits apply to all businesses, not just large businesses, who employ a relatively small proportion of the workforce.  And taxpayers also benefit from the higher taxes obtained from a larger workforce. And then there are the direct beneficiaries, parents themselves.

So one small group of taxpayers is in effect paying for a scheme that we all benefit from.

What Abbott claims, of course, is that over time, the Coalition will reduce the 1.7% slug as the deficit moves into surplus.  This shows that Abbott knows perfectly well the Coalition’s incessant complaints about unsustainable debt and deficits are nonsense.  He is counting on the fact that company tax receipts will surge again on the back of the resources boom, driving the Budget back into surplus far faster than the Government has forecast.

There’s another equity issue that the Government’s scheme also avoids: by keeping benefits to the minimum wage for all recipients, the Government avoids the problem of a regressive scheme like Abbott’s, which rewards higher income earners, who need little or not support from taxpayers, much more than low income earners.

Apart from anything else, that meant the Government’s scheme was not sidetracked by a debate about equity and whether high-income earners should be supported by taxpayers.

Abbott, like John Howard, doesn’t believe in means-testing transfer payments.  His instinct would have been for the scheme to cover all income levels, but he doubtless saw the thorny politics of a scheme that paid a millionaire’s salary for six months and compromised. He didn’t compromise enough.  High income earners need less taxpayer support than low income earners, but the Abbott scheme reverses that.