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Big banks fume over hefty new Australia levy

Big banks fume over hefty new Australia levy

Labor has tried to stymie the federal government's push to slash the tax rate for Australia's biggest businesses, saying the country can not afford it.

In a budget that targets the Turnbull government's future election prospects as well as much-needed fiscal fix - finally putting to rest the ghosts of Joe Hockey's politically toxic "lifters and leaners" budget of 2014 - Treasurer Scott Morrison described the 2017 budget as a "reset", and emphasised this was a budget for "right choices" and "fairness".

While Morrison has cautioned the banks that their customers "already don't like them", telling them to "prove (the customers) wrong and pony up to help fix the budget", bankers have warned the government that it was likely that the levy will be passed onto customers.

Mr Howard said he did not believe GST reform was possible in the current Parliament and the public needed to be made aware how a political deadlock was holding the country back from serious economic reform.

All up, the government hopes to save $2.8 billion from its latest plans to overhaul university funding.

For a government that has trenchantly resisted a royal commission into the banks - which is still a partisan division between the Coalition and Labor - its measures are certainly highly interventionist.

It is expected that the new levy will raise up to $6.2 billion.




While fending off those calls, the government has announced a number of measures since a year ago aimed at alleviating public concerns about the power of the big banks.

The federal government is now on a collision course for a protracted battle with the "four pillars" of the nation's retail banking sector, along with Macquarie Bank, after Scott Morrison imposed a new "Major Bank Levy" that could wipe billions from their bottom lines.

However, the banks say the levy is a "stealth tax", with customers and shareholders ultimately paying for in either reduced dividends or higher charges.

The backflip resulted in a bigger A$29.4 billion deficit for 2017-18 than the A$28.7 billion forecast at the mid-year review in December.

"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", said Anna Bligh, chief executive of the Australian Bankers' Association.

Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements, said the government. Note also, seen in this way, it's simply not true the increase in the Medicare levy is being used to fully fund the NDIS - as should be apparent from the fact the Budget was still projected to return to surplus with the NDIS even before this Budget.

"It seems not only were banks kept in the dark on this tax, but perhaps Treasury officials had been kept in the dark up until now", she said after the meeting in Canberra. "It began on July 1, 2016 and the cost over 10 years is as I described, $50 billion of which a little less than half, $24 billion, is the cost of the legislated saves, that is legislated reductions [for] companies with a turnover of less than $50 million". "They can lend 80-90% against the value of houses, but they would never lend that much against a business or a different asset class". "But we will work with the states and territories and local governments to get more homes built".

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