The Australian Bankers' Association has called on all Australian states to reject any move towards implementing a state-based bank tax similar to the one recently announced in South Australia.
Recently, ifa sister publication InvestorDaily reported that South Australia will implement its own state-based version of the federal bank levy, which is expected to raise $97 million in 2017-18.
In a statement yesterday, ABA executive director of industry policy Tony Pearson called on other states to refrain from following suit.
“We call on every premier and first minister to confirm they will not follow this poor policy precedent and instead will continue to foster investment, growth and jobs in their state or territory,” he said.
“This should not set a precedent for other states. It is a classic case of poor economic management.”
Mr Pearson said the South Australian bank levy will have a negative impact on jobs, investment and growth in SA.
“The strong consensus is that this will be negative for investment, growth and jobs in South Australia. The state needs incentives to attract business, not new taxes that will discourage businesses from investing in new projects and employing people,” Mr Pearson said.
Commenting on the matter, UBS bank analyst Jonathan Mott recently said, "Although South Australia's levy of $97 million across the majors and Macquarie is insignificant (at around 20bps of pre-tax profit) it is an outcome many investors had feared."
The banks are likely to "push back hard" against the SA levy on a number of fronts, Mr Mott said, with potential responses including a legal challenge, increased mortgage rates and a threatened move overseas.
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