Australian Banks Reject Calls For New Super Tax

By Editorial 11 March, 2013

The Australian Bankers' Association (ABA) has slammed calls for a super profits tax on banks, warning that this would amount to a tax on retirement savings.

Responding to reports in the Australian media that the Green Party are seeking the imposition of a new 0.2% levy on all bank assets above AUD100bn (USD102bn), the ABA cautioned against any such initiative. According to Steven Münchenberg, Chief Executive of the ABA: "The majority of bank profits are paid through dividends to Mum and Dad shareholders and superannuation funds." Were these profits taxed, those saving for their retirement through superannuation accounts, together with current retirees, would see their returns reduced.

In turn, banks would need to pass on higher costs to consumers if they hoped to maintain profitability. Lending to other parts of the economy would also become problematic, with Münchenberg explaining that bank assets are effectively loans. This might "make it more difficult for those parts of the economy, including small businesses, to get finance."

The ABA has also hit out at critics for failing to acknowledge the large contribution already made by banks to the Government's finances. 27% of bank profits were captured by taxes in the three years to end-2012, with the ABA arguing that banks contribute more corporate tax than any other industry in Australia. The total tax bill for banks over the past five years reached AUD40bn, with an additional AUD3bn paid through the bank funding guarantee.

"This populist Greens policy could end up hurting our economy. Solid bank profits are crucial for Australia’s long-term economic stability and to secure jobs growth. Bank shares are a mainstay of super fund investment given the stability of earnings and relatively high dividends and these returns help people saving for their retirement or earn income when they have left the workforce," Münchenberg concluded.

Tags: Expatriates | Tax | Small Business | Business | Banking | Retirement | Australia | Tax Rates | Dividends | Tax Reform |


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