It is becoming difficult to find those who believe that the proposed ‘budget debt levy’ is a good idea.

Former federal treasurer Peter Costello has joined the chorus of disapproval, saying the tax would provide “no economic benefit”

The details have not been let out, but insiders expect the Federal Cabinet will to approve the deficit levy in next week's budget.

Report says the tax will likely apply to incomes above $180,000 per year, though some suggest it would be closer to $100,000.

Mr Costello, who was recently handed the head job at the Future Fund, says the Government's rationale is purely “political”, and not based in economic sensibility.

“The argument for increasing income taxes through some kind of levy is all about the politics,” he wrote in his regular column for News Corp.

“The proposed tax levy has no economic benefit; it will detract from growth by reducing consumption.”

Mr Costello predicts that the Government will retreat from the levy.

“Long after this budget has been forgotten, the press and the Opposition would still be attacking the Prime Minister's credibility, and attacks over tax promises can be devastatingly effective – just ask Julia Gillard,” he wrote.

He says that the Government would have been fully aware of the backlash it is now receiving, and if it were serious, would not have mentioned such a proposal until budget night.

The stance is a reversal from Mr Costello’s opinion from the mid-Nineties.

“The tightening measures have to be fairly shared. We cannot expect those who rely on pensions and allowances - low income earners - to bear the cost,” the former treasurer said in 1996.

“So we are asking high-income earners to make a contribution and business to make its contribution too.”

Tony Shepherd has given a similar view.

The former business council chief and head of the recent Commission of Audit said the Government should be more cautious about its new tax.

“My personal feeling on that is a debt tax will have the impact of bringing us back to surplus more quickly, which is a good thing because if anything happens in the meantime it will give us the reserve capacity to do something about it,” Mr Shepherd told the ABC.

“I would certainly say, and it's not something that we looked at in the commission, but I'd say that if they were to bring in something like that, they'd need to be very careful about implementing any of our recommendations which have an immediate impact on the individual.

“So things like Family Tax Benefit B and that sort of thing. I think you wouldn't want to run that in parallel with a debt tax or levy, or whatever you want to call it, because that might just be too much of a shock for the system,” he said.