The Australian Bankers’ Association has rejected the Turnbull government’s assessment that the $6.2bn big bank levy will have a “negligible” impact on the economy but has ruled out running a mining-tax style ad campaign to combat the tax.
The treasurer, Scott Morrison, introduced legislation for the levy which fixes its rate on Tuesday and revealed that the first payment would be collected on 21 March 2018.
At a press conference on Tuesday the ABA chief executive, Anna Bligh, welcomed a small number of technical amendments addressing banks’ concerns about the application of the tax but called on the government to sunset the levy so that it expired when the budget returned to surplus.
Morrison said the levy would make banks pay “a fair additional contribution to the Australian community which they serve” and support competition in the “highly concentrated” banking sector.
He argued that the tax did not apply directly to savers or mortgage holders, despite the big banks warning they cannot absorb its cost and will have to pass it on through higher prices, reduced service or lower returns to shareholders.
According to the bill’s explanatory memorandum treasury modelling supports the view the tax “should have a negligible impact on the real economy”. On Monday the treasury secretary, John Fraser, told Senate estimates the levy would have a “trivial” impact on interest rates.
The regulatory impact statement noted the tax’s impact depended whether it was passed on and it was “not possible to be unequivocal” about whether mortgage holders and other bank customers would be slugged.
Bligh seized on that as a concession that the levy was a “tax on all Australians”. The former Labor premier-turned-bank lobbyist rejected the view it would have a minimal impact, citing a $39bn reduction write-down in banks’ value since it was announced.
“We’ve already seen markets around the world making their own judgment about Australia’s financial and banking sector, and marking that down in stock movements ever since budget day.”
The legislation revealed that the levy would no longer apply to derivative transactions, which banks use to minimise their risk, or the money banks hold with the Reserve Bank of Australia.
Bligh welcomed what she called “two very common-sense backdowns by the government”. But she said “there needs to be further consideration of a sunset clause that would limit this tax on our banks to the period of time that we need the budget repair job done”.
Bligh said that she had ruled out an advertising campaign by the ABA to block the tax or argue for a sunset clause.
Although the Nick Xenophon Team called for the bank tax to be extended to foreign banks there is no serious prospect the levy bill as it stands would be blocked, since Labor has said it will not stand in the way.
The explanatory memorandum said the tax would raise $6.2bn over four years “net of interactions with other taxes (including corporate income tax)”.
The Greens senator Peter Whish-Wilson said that nothing in the bill or memorandum addressed his concern the bank levy will not raise that amount once tax deductibility is accounted for.
“The Greens will continue to examine this when it comes to the legislation committee inquiry shortly,” he said. “We are considering our options when it comes to putting forward a legislative amendment to put a floor under the amount of revenue raised.”
The levy’s rate of 0.015% on certain liabilities is contained in the legislation, allaying concerns the bill could allow the government to increase the tax without putting a higher rate through the parliament.
The tax applies to the banks with liabilities of $100bn or above, indexed to gross domestic product.
Although the tax will apply from 1 July, the government will collect revenue for both the September and December quarters on 21 March, pushing out the timeline to collect the first revenue by three months to allow for implementation.