Wyatt still open to bank tax despite SA move

Treasurer Ben Wyatt has kept open the possibility of a bank tax in Western Australia, after South Australian Premier Jay Weatherill today quietly dropped his state’s planned tax on the five biggest financial institutions.

Mr Wyatt had said in his September budget speech that the government would be open to a state-based bank levy in the absence of genuine GST reform.

A previous state banking levy had been abolished in 2000 as part of the tax reform package at the time of the introduction of the GST, he said, and would have raised about $300 million in the 2018 financial year if it were still in operation.

Implementing a tax similar to the SA model would raise $250 million, Mr Wyatt said.

But Mr Weatherill dropped his proposed tax today.

Responding to an enquiry from Business News as to whether that would influence his position, Mr Wyatt stood firm.

“The state government will continue to consider all revenue opportunities to help address the massive debt created by the former government,” Mr Wyatt said.

The SA proposal had been to levy a tax at a rate 0.015 per cent of a bank’s eligible liabilities adjusted for the state’s share of the national economy.

Only ANZ, Nab, Westpac, the Commonwealth Bank of Australia and Macquarie Bank would have been subjected to the levy.

The move was blocked in the state’s legislative council, however.

Federal Treasurer Scott Morrison had included a similar impost in the federal government’s 2018 budget.

Reaction

Business Council of Australia chief executive Jennifer Westacott welcomed SA’s move.

“The South Australian bank tax threatened to sap investment and jobs from a state with persistently weak economic growth and an unemployment rate of 5.8 per cent – already above the national average,” Ms Westacott said.

“South Australians need their political leaders to support policies which encourage investment in local jobs and industry.

“The state needs investment in its potential not opportunistic, populist tax grabs.

“South Australian opposition leader Steven Marshall deserves congratulations for his principled decision to oppose the bank tax and credit for helping restore the state’s reputation among investors.

“Now that the bank tax has been abandoned the worst outcome would be for it to be replaced by another ill-conceived tax grab.

“South Australia’s economic woes will not be solved by creating uncertainty for businesses who want to invest.

“South Australians want a thriving economy with strong local jobs and wages growth.

“That will only happen when their political leaders get serious about the challenge of attracting investment.”