So, the four biggest banks have released their estimates of the cost of the Coalition’s 0.06% levy on the big 5 banks’ liabilities, which they claim will raise at least $2 billion less than forecast in the Federal Budget. Martin North explains:
So the big four have released data on the impact of the proposed bank tax, which was estimated to give more than $6 billion over 4 years, based on a 6 basis charge on selected liabilities. They say on an annual pre-tax basis they would pay around $1.38 billion, or $965m post tax (as the tax would be an allowable expense).
The net effect after tax (around 30% deduction) would yield just $3.86 billion (plus a smaller amount from Macquaire at current levels.
Its a moot point whether this post tax position was included in the budget papers or not.
The release of the banks’ cost estimates from the levy came immediately after Labor on Monday hijacked Question Time to try and discredit the Budget’s forecasts and, in turn, the Coalition’s policy (see yesterday’s post). To the impartial observer, it would appear that Labor had pathetically chosen to work hand-in-hand with the banks in a bid to score some cheap political points off the Coalition.
Yesterday, the shenanigans dragged on, with Labor maintaining the pressure over the Budget’s costings of the bank levy. From The Australian:
As Labor called on the Treasurer to “come clean” over the tax, Mr Morrison told parliament he stood by the forecasts despite early estimates from the big four banks showing they would pay less than the government assumed.
Australian Bankers’ Association chief Anna Bligh intensified her calls for the full disclosure of the Treasury modelling and the public release of the draft legislation so all sides could test the government’s revenue forecast…
Malcolm Turnbull accused Bill Shorten of running a “protection racket” for the major banks as the Opposition Leader and Labor’s treasury spokesman Chris Bowen kept up their attack on the government for fumbling the tax.
Mr Turnbull said Mr Shorten was “standing in the way” of the levy despite Labor’s stated support for the policy, while Mr Morrison said the Opposition Leader had been “tucking his knees under the table” as a guest of the major banks…
After Mr Bowen asked the Treasurer if he stood by his $1.6bn forecast, Mr Morrison said he did stand by the forecast while also noting that the budget also included a “cash basis” revenue forecast of $1.2bn for the same year.
“That is the figure for 2017-18 and that explains the difference between the numbers,” Mr Morrison told parliament…
The government insists it has allowed for the fact the banks can claim the levy as a tax deduction and therefore reduce the company tax they pay.
Here’s some questions for the Labor Party as it embarks on this pathetic line of attack.
First, assuming it is correct and the bank levy raises circa $2 billion less that Budgeted, will it still support the policy and pass it through the Senate? Because that’s still $4 billion more than the Budget would receive otherwise.
Second, would Labor prefer that the big banks continue to receive $5 billion in taxpayer support annually and pay absolutely nothing for the privilege? Or does it acknowledge that the levy at least claws back some of this cost?
Third, does Labor not recognise that it is also sabotaging itself for when it takes over office? Labor will very likely find itself in a situation where it will need to raise the bank levy further (or raise other taxes) to plug a gaping Budget deficit. And by mounting so much opposition to the Coalition on what should be bipartisan policy, the Coalition is very likely to return the favour when it is in opposition.
By resorting to cheap political point scoring on the bank levy, Labor has shown why it too is unfit for office.
