The South Australian government has come under fire from the banking industry for adding a major bank levy to its state budget that closely mirrors the controversial Major Bank Levy that recently passed in federal parliament.
According to SA treasurer, Tom Koutsantonis, the state levy is set to target the same banks as the federal levy, and is expected to raise approximately $370 million over four years to support various jobs initiatives in the state:
“Banking services have benefited enormously from the decision not to apply GST to the financial sector. This decision has meant that for too long this sector has been dramatically undertaxed.”
“The Commonwealth’s major bank levy seeks to address this, but ignores the state’s share.”
Banks come back swinging
As expected, the banking industry is less than thrilled with the SA government’s decision, with the Australian Bankers’ Association (ABA) accusing SA of “triple dipping” into bank money through corporate tax, the federal levy and now the state levy.
ABA chief executive, Anna Bligh, described the SA levy as an outrageous cash grab without policy substance, and called on Australia’s other state governments to rule out similar taxes:
“States are not responsible for banking policy. There is absolutely no policy reason for this announcement, other than a need for the South Australian Government to raise revenue in a desperate political move.”
According to the ABA, the previous introduction of Australia’s GST was partially intended to eliminate state-based taxes on financial institutions such as this levy.
Could this impact bank customers?
The South Australian bank levy comes with the same concerns for big bank customers and mortgage holders as the federal government’s Major Bank Levy – what if these costs are passed on to their customers through higher fees, interest rate increases, or other charges?
According to treasurer Koutsantonis, the draft legislation for the levy prohibits banks from creating a fee to recover the cost of the levy:
“This levy does not apply to mortgages or deposits under $250,000, so there is no justification for the banks to pass on the costs to those customers.”
Other areas of the SA budget expected to impact home owners and investors include a 4% surcharge on foreign purchasers (similar to other state levies), and additional incentives for first homebuyers to purchase off-the-plan apartments, to the tune of approximately $40,000.