Business leaders have expressed disbelief at the Weatherill government’s decision to duplicate the federal government’s controversial bank tax, describing the policy as a joke and an act of self sabotage.
The tax will apply at a rate of 0.015 per cent of South Australia’s share of bank liabilities and is expected to raise $370 million over the forward estimates.
Financial Services Inquiry chairman and former Commonwealth Bank chief executive David Murray said the tax was a stupid decision that could have disastrous consequences for the people of South Australia.
He said the SA levy may be avoidable on both legal and territorial grounds. Legal, because of the banking powers available under the constitution and territorial because of the natural limits of any state-based tax.
Mr Murray said the decision may well be challenged in court and said the federal government should reduce the state’s share of the GST as a punishment
Plan risks jobs
Australian Bankers Association chief executive Anna Bligh described the levy as an outrageous cash grab that was destined to backfire and said Australian tax policy was at risk of becoming a worldwide joke.
“South Australia is a state that needs economic confidence – at 6.9 per cent it has the highest unemployment rate nationally. Today’s announcement is the worst possible signal to the business community in South Australia and will make South Australia less competitive, potentially driving jobs to other states,” she said.
“Tax policy in Australia is now becoming a joke at the whim of political opportunism and South Australia is trying to impose triple dipping for bank taxation.
“The banks impacted by this proposal pay full corporate tax, the federal government has just passed a new bank tax and now the South Australian government is trying to impose a third state tax.”
A spokesman from NAB said the tax was poor policy that lacked logic.
“The role of the Australian banks is to support customers and communities and drive economic growth and activity. It is not to be a blank cheque so governments can cover their own budget shortfalls,” the spokesman said.
“South Australians want their state to be more attractive to investment that will enable it to transition its economy and create new opportunities and jobs – this tax will do the opposite.”
Flawed from start
“To the extent that it reflects what the federal government did with the Major Bank Levy, which was a bad tax, a tax on unpopularity with no sustainable basis, then I would make the same kind of assessment.”
Australian Foundation Investment Company managing director Ross Barker, who controls almost $2 billion in bank shares, said this latest anti-business policy was a troubling development.
“There is no justification for this state tax other than a grab for revenue. It is clearly open season for governments attacking big banks, but it is their shareholders who will bear these added taxes,” Mr Barker said.
“It is a very worrying increase in sovereign risk for investors in Australia. Foreign investors would be scratching their head and wondering where our commonsense has gone.”