A government-dominated Senate committee has agreed with a request by the nation’s big banks for a review of the government’s proposed $6.2 billion levy in two years.
The major banks argued in their submission to an inquiry into the levy there should be a review into the policy’s effectiveness, its impact on banking competition and whether it should be permanent.
The Senate committee report, tabled in parliament on Monday, agreed to the idea of a review.
The committee also supported the banks’ suggestion of a Treasury examination into technical aspects of the legislation, including whether the levy represented “double taxation” or narrowed banks’ liability base.
As well, Treasury should better explain why foreign banks are excluded and Macquarie Bank is included as one of the five “major banks”.
The legislation should also be amended to allow the Treasurer to suspend the levy in cases where banks are in extreme financial hardship, the report said.
“On the basis of the evidence provided, the committee considers that the proposed levy will contribute to the budget repair process, assist in making retail banking services more competitive, and will not undermine the stability of the financial system,” the report concluded.
Labor senators said in their additional remarks in the report the bill should be passed as it would contribute to budget repair.
But they called for Treasury to release its work on why foreign banks should be excluded from the levy.
The opposition senators also sought more information on what revenue is expected from the levy, given that its interactions with other parts of the tax system were likely to lead to a shortfall in the government’s projections.