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Australian Bankers Defend Tax Record

by Mary Swire,, Hong Kong

28 June 2017

The Australian Bankers' Association (ABA) has published a new report which it says shows that banks are among the highest corporate taxpayers in the country.

The report was released in response to the South Australian Government's announcement that it would introduce a new bank levy on top of the federal tax that has just passed through parliament.

According to the South Australian Treasurer, the levy represents just 0.3 percent of the AUD30bn (USD20.1bn) in profits the major banks make each year. Tom Koutsantonis expects the levy to raise AUD370m over the forward estimates, which will be used to fund employment initiatives including the Future Jobs Fund and the Job Accelerator Grant scheme, and a package of payroll cuts.

Tony Pearson, Executive Director – Industry Policy – at the ABA said: "Koutsantonis claims that a new tax will ensure 'the sector contributes its fair share', despite the fact that the industry paid over AUD14bn in tax last year alone."

"Banks make the highest contribution by far to help governments at all levels fund essential public services such as hospitals, schools and roads, and income support for those in need."

The ABA report stated that almost AUD11.5bn was paid to the federal Government in corporation tax in 2016. A further AUD1.1bn was paid in goods and services tax, AUD441m in income tax on life insurance assets, and around AUD100m in fringe benefits tax. Another AUD1bn was paid to state and local governments in payroll tax, land tax, council rates, and other taxes.

The report also noted that in 2016, a total of AUD22.4bn in tax was paid by companies listed on the ASX 200. Banks paid 55 percent of this total, and in 2016, the four major banks were the top four tax-paying companies in the country.

Pearson added: "The banking industry makes a vital contribution to the community. Banks employ 140,000 people around the country – around 8,000 of those in South Australia."

"In 2016, banks paid AUD25bn in wages and salaries to staff, AUD26bn in dividends to shareholders – many of whom are mums and dads – and AUD66bn in interest on bank deposits and bonds."

The state's "major bank levy" will be introduced on July 1, 2017, when the federal measure will also enter into force. The levy will apply only to liabilities that are also subject to the federal levy. The rate will be 0.015 percent per quarter.

Levy liabilities will start accruing from the quarter ending September 30, 2017, but, as with the federal tax, the first payment will not be due until March 21, 2018.

TAGS: tax | interest | banking | insurance | fringe benefits | corporation tax | goods and services tax (GST) | Australia | payroll | tax rates | dividends | revenue statistics | tax reform | trade association | trade | individual income tax | services

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