The Coalition might have to increase its contentious bank levy to collect its revenue target of $6.2bn, say analysts warning of a multimillion-dollar shortfall on Tuesday.
Labor is calling on the Coalition to explain how large the revenue shortfall will be over four years, and to rule out raising the levy rate to make up the difference.
Deutsche Bank and Morgan Stanley analysts warned earlier on Tuesday that the revenue collected by the government’s bank levy could fall half a billion dollars short this year.
They said there was a risk the government would therefore try to raise the levy to meet its $6.2bn revenue target.
The political battle over the bank levy continued in question time on Tuesday, with Labor pressuring the government to explain the apparent problem with its calculations.
The government says its bank levy will collect $6.2bn in revenue over four years, applied to the Commonwealth Bank, Westpac, NAB, ANZ, and Macquarie.
But the big four cast doubt on that figure on Monday. Westpac told its shareholders the levy would cost the bank roughly $260m after tax over the next 12 months, and the Commonwealth Bank ($220m), NAB ($245m) and ANZ ($240m) provided their own estimates. It brought the collective cost of the levy to $965m over the next year.
It prompted banking analysts to warn it wouldn’t be enough to meet the government’s $2.6bn revenue target.
Deutsche Bank analysts Andrew Triggs and Anthony Hoo warned clients the government may want to lift the rate of the bank levy to make up the shortfall.
“The aggregate amount to be collected by the government is likely to fall short of the $6.2bn targeted in the budget over the four-year period, hence we see a risk that the 0.06% levy could be lifted,” they said.
Their view was echoed by Morgan Stanley, which wrote: “The banks’ disclosures seem to confirm our view that a levy of 0.06% would not raise enough to meet the government revenue-raising objective of at least $1.5bn a year. We therefore think the rate could be adjusted accordingly.”
The shadow treasurer, Chris Bowen, jumped on the analysts’ warnings, saying the government had questions to answer.
“Depending on where the smaller Macquarie Bank lands, the revenue gap could be more than $100m for 2017-18 alone,” he said on Tuesday. “This is occurring just two weeks after the budget and the announcement of the government’s bank tax rate and liability base.
“Scott Morrison needs to come clean on what the revenue shortfall will be over the forward estimates and [should rule] out any further changes to the bank tax rate or liability base to attempt to make up the revenue shortfall.”
Morrison had told Bowen in question time there was nothing wrong with the budget’s numbers.
“The attempt that the shadow treasurer’s trying to engage in here is to try and throw up dust,” he said. “The assumptions behind the numbers hold and the measures that have been presented in the budget are as I have outlined in my budget speech and are as presented in the budget documents. They are very clear.”