Australian banks face 'Pandora's box' of taxes after state hike

Australian banks face 'Pandora's box' of taxes after state hike

Cheryl Sanders
June 23, 2017

"With the federal election 12 to 18 months away, further increases in the federal bank levy can not be ruled out, especially if the Australian budget remains under pressure", Mr Mott said.

On Friday, shares of ANZ, Commonwealth Bank, National Australia Bank and Macquarie were down about 0.5 percent, in a slightly higher overall market, while Westpac was up 0.3 percent.

While a state bank tax was not now being considered, Western Australia was watching how it went in South Australia, he said.

The levy will be set at 6 basis points of applicable liabilities for the big banks and Macqaurie.

This morning Prime Minister Malcolm Turnbull questioned South Australia's approach on the issue, raising the question of whether a state-specific levy would drive productivity in the region.

The WA government itself announced on Thursday hikes in utilities and other fees that will slug the average West Australian household an extra $438.40 a year under the 2017/18 state budget.

That's on top of the Federal levy of 0.06 per cent to the same amount, $250,000, although both levies don't apply to ordinary household deposits or mortgages.

The South Australian levy "is a left-field and in our view unjustified move which will do immaterial harm to the banks' profits but further dents already fragile sentiment and raises the threat of increased political risk", they said.

Unemployment in South Australia is 6.9%, the highest in the nation.

Although the 2017-18 state budget's catch-cry is "putting South Australians first", country residents have largely missed out on direct funding.

Only banks liable for the federal Government's major bank levy will be liable for the South Australian levy.

"Unfortunately repeating the jobs, jobs, jobs slogan like a mantra won't deliver the policy initiatives critical to deliver actual jobs growth in South Australia", opposition treasury spokesman Rob Lucas said.

"It beggars belief that instead of supporting policies that will increase the investment needed to create jobs, such as a globally competitive company tax rate, the South Australian government is doing the opposite", Westacott said.

The SA Government said that the tax is necessary because the financial giants were "significantly undertaxed".

"Now is the time for the government to make sure that we can grow those new jobs to make sure we can transition as Holden closes", he said.

Other reports by iNewsToday