Bank levy passes with conditions

By Leith van Onselen

In a slice of good news, the Senate last night passed the bank levy bill after Labor voted for it. However, One Nation opposed the levy, with Senator Brian Burston describing it as a “lazy, ugly, cheap solution”.

Meanwhile, the Senate’s eco­nomics legislation committee has recommended that the levy should be reviewed within two years. Australian Bankers’ Association CEO Anna Bligh says any future review should consider adding a sunset clause to the legislation, but this has been ruled out by Treasurer Scott Morrison.

From The Australian:

The recommendation for a ­review was made by the government-dominated Senate eco­nomics legislation committee after a hurried one-day hearing on Friday received input from the banking sector.

The committee’s final report argued that a review in two years would allow parliament to assess the impact of the levy on compe­tition in the banking sector and test whether it was contributing to its objective of assisting budget repair…

Ms Bligh yesterday said she supported a Senate review in two years to “examine the impacts of the tax”, including the question of introducing a “sunset clause once the budget is in surplus”.

The push for a review in two years came despite the Treasurer already ruling out the prospect of a sunset clause.

Mr Morrison argues the levy is intended as a permanent “structural measure”, noting that debt will need to be paid down well after the budget is scheduled to return to balance in 2020-21.

MB has supported the banks levy from the very beginning primarily because it would recoup some of the estimated $5 billion in annual taxpayer subsidies provided to the banks annually through the implicit guarantee, as well as contributing meaningfully to Budget repair.

While we would have preferred that the levy was roughly triple in size (0.18% instead of 0.06%), so that it more fully recouped the cost of the taxpayer subsidy, we recognise that the levy as it stands is a major improvement on the status quo.

Well done to the Turnbull Government for pushing this reform through.

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  1. so when should we expect the hike and how big will it be? Surely banks will pass this cost on..

    • Tassie TomMEMBER

      0.06%. Which means that the bank’s profits will be the same, which means that their company tax will be the same even if the bank levy is deductible. Which means that the bank levy will collect the headline amount, as nothing will be offset by reduced company tax due to its deduction.

      • they may lump this with the FED hike cost and make it 0.16%. It sounds small but for those overleveraged.. the straw..

  2. Terror Australis

    When the Greens proposed a bank levy a few years ago, it was riduculed by the Canberra establishment.

    Now ALL the major parties are on board.
    Irony much?

  3. FiftiesFibroShack

    Once again One Nation proves they’re just social conservatives that are too loopy and crooked to make it into the LNP.

    • “too loopy and crooked to make it into the LNP” – I will challenge that. ON is so popular among Lib voters because they are as loopy and as crooked as LNP. So LNP voters use ON as leverage against LNP.

    • I wonder if a tax on foreigners would be right up their alley.

      Such as $35/day for a train ticket unless the passenger has a Medicare card.

      • FeknameMEMBER

        I know its like ‘your thing’ to go on about a $35 a day train ticket (like its Reusa’s thing to be attractive) but you surely realise that there is an equal chance of getting tourist travel costs subsidised as there is to get them slugged? Bringing any topic into debate means bringing its antithesis into common discussion.

        You may end up regretting pushing so hard for people to talk about transportation costs and tourists. Australia has a huge cultural cringe, and may end up wanting to pay a little to make Australia look better than it is in the eyes of its guests.

  4. The conditions should include:

    Banks be not allowed to remove $4/month from my bank account for the privilege of keeping money in there.

  5. I think the real win for the Govt and loss for the banks is getting any rate at all on the books. This hurdle having been passed, it is a much easier thing to jack it up in times of crisis, i.e. smaller institutions going under or general fiscal chaos and much more palatable than bail ins, direct taxes on depositors etc. Even if it is passed through to borrowers / depositors in some way or another (it will be) it was the smoothest move the Gov’t could have played.

    This Govt, which is really in a hole in so many ways, has served sh#t sandwiches to the 457 industry and the banks so far and looks presently to be in the dunny kitchen cooking up a feast for the energy sector. Not exactly out of the woods by a long way, but at least something more that re arranging the deck chairs.

    For the record, still a pack of c#nts in my book.