Westpac says the new bank levy is a 'stealth tax' on the life savings of Australians

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The banks have started fighting back against the federal government’s new $1.5 billion annual levy.

Westpac, the Commonwealth and the NAB say customers and shareholders will be hit hardest by the new tax, which will apply to the big four banks plus Macquarie.

Analysts estimate that the average profit of the big four banks will be cut by between 5% and 6% next financial year because of the new tax.

Westpac Group CEO Brian Hartzer says the tax is a hit on the retirement savings of millions of Australians as well as all bank customers.

“This levy is a stealth tax on their life savings, the shares in their superannuation accounts, and it will make Australia’s banks less competitive,” he says.

About $14 billion of value was wiped from bank shares yesterday because of speculation about the new tax.

However, Hartzer says the cost of any new tax is ultimately borne by shareholders, borrowers, depositors and employees.

“The Australian banks are already the largest taxpayers, with Westpac the country’s second largest taxpayer,” he says.

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

Ian Narev, CEO of the CBA, noted the lack of detail about the levy and the absence of any consultation with the banks.

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

Wespac’s Hartzer says similar taxes operate in other countries but these were introduced to recover the cost of governments having to take over their banks.

“No taxpayer funds have been used to prop up the Australian banks,” says Hartzer.

“In addition, international jurisdictions that apply measures such as this already have much lower corporate tax rates than Australia — for example, in the UK the corporate tax rate is 20%.”

In Australia, corporate taxes are still 30% for larger companies.

“It is disappointing that the Australian Government has implicitly favoured large foreign banks over Australian banks operating in their home market,” he says.

NAB’s Andrew Thorburn says it is not possible to impose a tax without an impact on people and the wider community

“The major bank tax will impact millions of everyday Australians who are employees, customers or shareholders of banks,” he says.

“It is not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our industry.”

The ANZ bank released a short statement saying the new tax is the subject of briefings by the government in the coming days.

“At this stage it is too early to provide a definitive estimate of the financial impact on ANZ and an update will be provided to the market when ANZ’s analysis is complete,” the bank said.

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