The Customer Owned Banking Association (COBA) has called for tax changes in the federal budget to spark innovation, promote greater competition and deliver more consumer choice in the retail banking sector.
COBA chief executive Mark Degotardi said the current tax system puts an unfair burden on the customer-owned banking sector, and that measures put forward in the association’s pre-budget submission to Treasury would support a more “competitively neutral framework” in retail banking.
“We currently pay a higher effective tax rate than our major bank competitors,” he said.
“The FSI warned that the banking sector is concentrated and this poses risks to both the stability and degree of competition in the Australian financial system.
“COBA’s tax policy proposals will strengthen the capacity of the customer-owned banking sector to take advantage of this more pro-competitive regulatory framework to apply genuine competitive pressure to the major banks.”
COBA’s submission to the Treasury proposes a company tax rate of between 22 per cent and 25 per cent for customer-owned banks, as well as an expansion of GST-reduced input tax credit item 16, ‘Credit Union Services’, to accommodate mutual building societies and former building societies that are now mutual banks.
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