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Australian Prime Minister Malcolm Turnbull has expressed concern at plans by South Australia to duplicate his government’s new tax on the country’s five top banks.
“It’s one thing to have a tax that covers the whole country, but when a state imposes higher business taxes within its own jurisdiction, is that actually going to drive investment, support jobs within that state, or is it in fact going to make it less competitive?” Turnbull said June 23 to journalists in Canberra.
Turnbull was commenting on a bank levy proposal contained in the state budget for South Australia, released June 22 by Treasurer Tom Koutsantonis.
South Australia announced its plans just three days after the federal parliament passed legislation establishing the national version of the tax.
The South Australian version would be identical to the national one, applying at the same rate from July 1 to the Commonwealth Bank of Australia, Westpac Banking Corp (Westpac; Westpac Institutional Bank), Australia & New Zealand Banking Group Ltd (ANZ Banking Group), National Australia Bank Ltd, and Macquarie Group Ltd.
But it would be calculated only on their relevant liabilities in the state, estimated on the basis of South Australia’s share of national Gross Domestic Product. The rate applied to the relevant liabilities is 0.015 percent per quarter, according to a June 22 news release.
The South Australian government estimates the measures would raise A$370 million ($280 million) over the next four years.
A bill to enact the tax has yet to be introduced into state parliament and South Australian Premier Jay Weatherill’s state Labor government needs four extra votes to pass it in the Legislative Council.
Based on voting patterns of parties in federal parliament’s vote on the bank tax, and party representation in the Legislative Council, the bill is likely to get through.
However, the various non-government parties in the Legislative Council are yet to confirm their positions.
Weatherill June 23 said the proposed tax was fair and legal, describing banks as “undertaxed.”
The state would be “copying precisely the same rate and method of application” of the tax as the federal government had used, he told ABC national radio.
Weatherill said other state premiers and territory chief ministers might well consider imposing the same big-bank tax, a prospect the Australian Bankers Association (ABA) warned against.
“The impacted banks call on every Australian premier and first minister to rule out a similar tax,” said ABA chief executive Anna Bligh in a June 22 statement.
Bligh described South Australia’s move as “an outrageous cash grab without policy substance.”
The National Australia Bank described it as “poor policy without logic” in a June 22 statement, while the Commonwealth Bank’s chief executive Ian Narev said governments shouldn’t be “penalizing businesses that are creating jobs and driving economic growth.”
Business Council of Australia chief executive Jennifer Westacott said the Turnbull government “must bear responsibility for letting the genie out of the bottle” by introducing the national version of the tax.
“Australia is becoming a laughing stock of global investment circles as erratic governments—state, territory and federal—carelessly undermine and chop and change the rules of doing business,” Westacott said in a June 22 statement.
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