New major bank tax bad for jobs and economic growth

Sydney, 9 May 2017: A new tax on major banks in the Federal Budget is a tax on the economy, the Australian Bankers’ Association Chief Executive Anna Bligh said tonight.

“This new tax is a direct attack on jobs and growth, not just a tax on the five largest banks.

“It is a tax that will hit Australians by hurting investment and could have unintended consequences.

“Contrary to the Government’s claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system. 

“This new tax is not a well thought out policy response to a public interest issue, it is a political tax grab to cover a budget black hole. 

“It is naïve and misguided and has already sent the wrong signals to global financial markets about the strength and stability of our banking sector.

“Market speculation about this new tax just today stripped around $14 billion from the value of life savings and superannuation accounts of ordinary Australians after bank shares plummeted.”

Ms Bligh said it was particularly disappointing there had been no consultation with industry about the new tax.

“In a period in which there has never been more consultation between Government and banks on a wide range of issues, on this issue there has been none.

“Criticism of the banks in recent times, including from the Government, has focused on the need to improve conduct and culture within the industry and to focus on the needs of its customers. This new tax will address neither.

“Banks know they need to take action to build trust and credibility with the community. That’s why we are taking action now with the largest ever reform program in the industry’s history.

“We are implementing dozens of recommendations from Government inquiries and reviews and we have already expressed strong support for almost all of the recommendations from the recent Carnell, Coleman and Ramsay reviews,” she said.

Ms Bligh said banks were the largest corporate tax payers in Australia.

“In 2016, banks paid around $11.5 billion of income tax. This new tax represents in the vicinity of a 10% increase in tax.

“Contrary to popular perception, Australia’s banks are not unusually profitable. In 2016, the average return on equity of Australia’s four major banks was just under 14%, which ranked them around the middle of the returns of the top 50 listed companies.

“If the Government thinks major banks can afford to pay a new tax, it should make every company in Australia which earns more than banks wonder who’s next,” Ms Bligh said.

ENDS

Contact: Stephanie Arena 0477 470 677 or Nic Frankham 0435 963 913

@austbankers

bankers.asn.au