By Robb M. Stewart
MELBOURNE, Australia--Australia's largest banks have dodged a second tax on their liabilities after a state's plans for a version of a new federal levy were blocked by opposition parties.
The government of South Australia said Wednesday it had abandoned legislation that included a major bank tax aimed at funding job-creation initiatives after opposition from three rival parties, including the state arm of Prime Minister Malcolm Turnbull's Liberal Party. The proposal had run up against a public campaign by the banking industry which had warned of the tax's impact on shareholders, customers and employees.
South Australia's Premier Jay Weatherill said his government had taken the fight to the banks but the tax was now "dead." His Labor Party won't take the tax plan to the next state election or seek to reintroduce it if reelected, he said.
Plans for the tax were introduced in the state's budget in June, ahead of elections due next year, and would have introduced a 0.3% levy on the liabilities of the country's five biggest banks, raising an estimated 417 million Australian dollars (US$317.9 million) over four years.
The tax was included in a bill that would have also have cut payroll taxes by almost A$10,000 for thousands of small businesses and offered incentives for the construction and purchase of apartments in South Australia.
The levy would be applied to the same five banks--Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, Macquarie Group Ltd., National Australia Bank Ltd. and Westpac Banking Corp.--that were targeted by a federal tax passed by parliament earlier this year that is forecast to raise up to A$1.6 billion a year to help Canberra close its budget deficit.
ANZ Chief executive Shayne Elliott, who had been particularly vocal in criticizing the state levy, said abandoning the tax sent a clear signal that South Australia was again open for business and investment.
"Today is a real victory for the people of South Australia and in particular for those who operate businesses," Anna Bligh, CEO of the Australian Bankers' Association, said. "The decision will provide them with a greater level of confidence and certainty, which is vital for business."
Despite lobbying by the banks to limit the duration of the federal tax and to extend it to cover large international banks operating in the country, Canberra pushed ahead with a tax that from the last quarter imposed a 0.015% quarterly tax on banks with assessed liabilities of A$100 billion or more.
Last month, ANZ's Mr. Elliott said the environment for revenue growth in 2018 was likely to remain constrained due to intense competition and the effect of legislation including a full year of the bank tax. The warning came as the bank reported a 12% rise in its annual profit to A$6.41 billion as credit impairments fell and there was no repeat of the prior year's charges for restructuring and software capitalization.
Write to Robb M. Stewart at [email protected]