Banks admit consumers will bear new levy

On Tuesday, the government announced it will impose a 6 basis point levy on the liabilities of the top five largest banks in Australia by 1 July 2017.

Westpac Group chief executive Brian Hartzer said the new tax is a hit on the retirement savings of millions of Australians as well as all bank customers.

“There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors and employees,” he said.

“Westpac already pays over 30 per cent of its profits in tax and this will now increase even further.”

NAB chief executive Andrew Thorburn also confirmed the new tax will only hurt the public, saying this is “not just a tax on a bank”.

“It is a tax on every Australian who benefits from, and is part of, our industry,” he said.

“A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community.”

CBA chief executive Ian Narev echoed these sentiments.

“As every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both,” he said.

The banks noted it is not yet known how much of a financial impact the new tax will have.

In the lead-up to the budget announcement, the share prices of the big four banks fell by an average of 3 per cent, despite the S&P/ASX200 only falling by 0.5 per cent.