South Australia has taken a leaf out of Scott Morrison’s book and imposed a tax on the big five banks – a move that looks like being a retreat to the stupid days of a myriad of state taxes and duties on banks that lasted through the 1980s and 90s.
The tax is expected to raise $370 million over the next four years from Commonwealth, National Australia, Westpac, ANZ and Macquarie.
Bank shares closed higher on the ASX yesterday, despite news of the new tax.
The move has embroiled the country’s five biggest banks in a brawl with the South Australian which attempted to justify the tax by claiming the banks were “significantly undertaxed”.
The ALP South Australian government and Premier Jay Weatherill have long argued for financial services to be subject to GST, and yesterday they filled the gap, as they see it.
The banks naturally object to the tax, with ANZ chief Shayne Elliott saying it was an “ill-considered cash grab”, a NAB spokesman branding the tax “poor policy without logic”, and Westpac calling the tax a “disgrace”.
Australian Bankers’ Association chief executive, former Queensland premier Anna Bligh, said tax policy in Australia had become "a joke" and the Business Council of Australia, blamed the Turnbull government for the hit, after it introduced a bank tax in the budget.
South Australian Treasurer Tom Koutsantonis said the tax would be structured in the same way as the Federal levy (which starts on Saturday week, July 1) charged at a rate of 0.6 percentage points of liabilities (6 cents in the dollar). However, it will only apply to a share of bank liabilities equal to the state’s share of the national economy.
"The banking sector is very profitable and a Major Bank Levy is a fair and reasonable approach to ensuring the sector contributes its fair share," Mr Koutsantonis said.
A Westpac spokesman warned the tax may affect banks’ decisions about investments in the state. "We were disappointed by the Federal Government bank levy, but the SA proposal is double taxation and is a disgrace," he said.
"The role of the Australian banks is to support customers and communities and drive economic growth and activity. It is not to be a blank cheque so governments can cover their own budget shortfalls."
