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South Australia Urged To Drop Bank Levy Plans

by Mary Swire, Tax-News.com, Hong Kong

01 November 2017


The Australian Bankers' Association (ABA) is making a final push for the rejection of a proposed new bank levy in South Australia.

Ahead of a crucial parliamentary vote on the policy, ABA Chief Executive Anna Bligh has written to members of parliament (MPs) to warn against implementation of the levy and to outline the contribution banks make to the state's economy.

According to Bligh, "Voters are rightly concerned that this tax will negatively impact employment and make the state less competitive at a time when South Australia desperately needs jobs, investment, and growth. The bank tax will discourage investment, put a handbrake on growth, and impact jobs. Make no mistake, it will make South Australia a risky place to do business."

Legislation to implement the tax passed the lower house of the state parliament in August. If passed by the Senate in the coming days, the legislation would impose a levy of 0.015 percent per quarter on the liabilities of the four major banks, plus Macquarie bank.

The retrospective start date for the levy would be July 1, 2017, the date on which a federal bank levy entered into force. The state levy would only affect liabilities also subject to the federal tax.

Bligh said that, in the 2015-16 financial year, banks "injected AUD1.5bn (USD1.2bn) into the South Australian economy through dividends paid directly to the 146,400 South Australian bank shareholders, and they lent AUD10bn to South Australians to buy a home." She added that the financial services industry is the second biggest economic sector in the state, contributing 7.7 percent of the gross state product.

Bligh also emphasized the tax contribution already made by banks. She said that banks paid around AUD11.5bn in Australian corporate tax, "of which around AUD650m would have flowed through to South Australia," with an additional AUD25m paid in state payroll tax and AUD1bn a year in federal GST.

TAGS: tax | investment | business | banking | financial services | Australia | payroll | legislation | tax rates | dividends | tax reform | trade association | trade | services

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