The South Australian government’s proposed $370 million levy on Australian banks has been labelled an “outrageous cash grab” by the Australian Bankers’ Association.
Announced in the state budget on 22 June, the proposed tax will target the big four banks as well as Macquarie Bank, with a quarterly levy on bonds and deposits over $250,000 of 0.015 per cent. Mortgages and ordinary household deposits are exempt from the tax.
The levy is expected to bring in $370 million over the next four years.
Anna Bligh, ABA CEO, condemned the measure, arguing that government budget shortfalls were not the responsibility of banks and that the levy constituted a “step back in time”.
She commented: “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.”
ANZ CEO Shayne Elliot echoed the sentiment, calling the tax “deeply concerning”, adding that following “repeated power failures…[the state government] would be wise to be more welcoming of both investment and capital”.
He added that the levy could have long-term impacts on South Australia.
The state government also introduced a 4 per cent stamp duty surcharge that will apply to residential property purchases made by foreign buyers from January 1, 2018.
The South Australian state government levy follows the introduction of a national levy on the same five banks by the federal government in May. Brought in to improve competition, the national levy will become law on 1 July 2017 and will raise up to $6.2 billion through a quarterly levy of 0.015 per cent.
[Related: Bankers chest-beating over levy changes]