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Turnbull Comments On South Australia's Bank Tax Plan

by Mary Swire,, Hong Kong

23 June 2017

Australia's federal Prime Minister, Malcolm Turnbull, has questioned whether the introduction of a new bank levy in the state of South Australia will harm the state's competitiveness.

The South Australian Budget included plans for a "major bank levy," to be introduced on July 1, 2017. The announcement came just days after the federal Government passed a similar measure through the Senate.

Turnbull was asked to comment on the proposal during a press conference in Canberra. He replied that "states obviously have taxing powers and they can raise such taxes as they wish and they do so." He added that, in contrast to his Government's measure, the South Australian levy would be limited to that state.

However, Turnbull said that state Premier Jay Weatherill will be faced with the question of whether the measure will "make business in South Australia more or less competitive."

He explained: "See, it's one thing to have a tax that covers the whole country, but when a state imposes higher business taxes within its own jurisdiction, is that actually going to drive investment, support jobs within that state, or is it in fact going to make it less competitive?"

Only banks liable for the federal Government's levy will be liable for the South Australian tax. The amount payable will be about six percent of each bank's federal levy liability. The rate will be 0.015 percent per quarter, and the first levy payment will be due on March 21, 2018.

The proposal has come under fire from the banks that will be affected by its implementation.

Shayne Elliot, CEO of ANZ said: "This deeply concerning tax will likely impact business investment in South Australia at a time when its economy is struggling with low growth, low business confidence, and high unemployment."

According to Ian Narev, CEO of Commonwealth Bank, "Australia's economic potential will only be met when state and federal governments deliver sustainable budgets and don't indiscriminately add new taxes or levies."

A Westpac statement described the measure as bad public and economic policy. It added that the company was disappointed by the introduction of the federal levy, and regards the South Australian proposal as double taxation.

TAGS: tax | investment | business | banking | budget | Australia | unemployment | tax rates | tax reform | business investment

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