"They Can And Should Do More" Australian State Slams Banks With $280 Million Tax

Tyler Durden's picture

Australian bankers are furious after the country’s smallest state levied a “surprise” tax on the country’s five biggest banks that could siphon off $280 million in profits during its first four years on the books, according to Reuters.  The tax was imposed by South Australia, which is struggling with the country’s highest unemployment rate and thanks the banks should be doing more to pitch in.

The decision, which provoked “howls of outrage from the sector,” represents an added financial burden on the largest banks beyond a $4.2 billion federal tax that was imposed last year - not to mention the country's record-low interest rates.  The banks, struggling with low public favorability after a series of scandals and unified support in the country’s legislature, accepted that tax with minimal pushback. However, some are already threatening to pull investment as a form of retaliation.

The head of the Australian Bankers Association Anna Bligh called the tax "an outrageous cash grab without policy substance". Westpac Banking Corp and Australia and New Zealand Banking Group said the move could provoke a backlash from banks as they could decide to curtail investment in the state.

South Australian Treasurer Tom Koutsantonis said the five banks, which together collect about $30 billion in profit annually, can and should do more to help boost employment and contribute more to the state's economy. The tax revenues will be used to fund job-training programs, Koutsantonis said.

Australia’s bankers fumed, saying they already do enough to prop up the country’s economy.

"All businesses will rightly question the political risk associated with investing in a State with a Government prepared to unfairly target an industry that has played a significant role in supporting its lagging economy," ANZ Chief Executive Shayne Elliott said in a statement.

The decision provoked speculation about whether the country’s other four states would impose similar taxes, with at least one analyst suggesting that at least a few states will.

"I would say it is definitely on the cards for other states," said Morningstar analyst David Ellis said. "For any cash-strapped state it looks like it is just an easy option."

However, he said it was unlikely that the country's largest state, New South Wales, would impose a similar tax because it had a strong budget surplus and would want to maintain Sydney's reputation as an Asia-Pacific financial services hub.

The tax will be equivalent to 6 basis points on 6 percent of the assets being taxed by the federal government. Koutsantonis reasons this is fair because South Australia’s economy accounts for only 6% of national GDP.

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Cognitive Dissonance's picture

It's a good start.

Their banking charter could always be pulled if they get too out of hand.

Blue Balls's picture

I am trying to be sympathetic but.... I failed.

Citxmech's picture

Effectively, this is just another tax on the citizen.  Who do you think ends up paying for this in the end?  It sure as fuck doesn't come out of the CEO's salary.

UnpatrioticHoarder's picture

Other FIVE states, there are 6 Australian states.

West Australia is likely to follow suit.

And Tasmania is the smallest state economy, not SA.

https://en.wikipedia.org/wiki/List_of_Australian_states_and_territories_...

The Federal tax is only on the largest 5 or so domestic banks. Foreign banks are not covered. The Federal govt never made the argument on principled terms - that banks receive an implicit taxpayer subsidy via the Reserve Bank of Australia's ability to bail them out.

State governments provide no such service to banks but the Federal govt did a cash grab and the precedent has been set.

Stuck on Zero's picture

The states probably saw the salaries of the bank CEOs and got pissed.

targayren hous's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobproplan.com

ModernMusket's picture

Not all of us want to give blowjobs to wealthy old men. Good for you, though. Providing a needed service .

OpTwoMistic's picture

You have no employee owned credit unions where the President makes 150 thousand instead of 150 million,  Amazing what that does to all interest rates.  I use several diferent accounts.

Think about it.

Jultorsk's picture

Hardly a surprise given the incompetent "electricity comes from the power outlet" SA Labor premier and government. Ditto for WA - wouldn't be surprised to see Victoriastan follow suit. Sad.

not dead yet's picture

South Australia has gone big on climate change and renewables and has quite a few blackouts for the WHOLE STATE. Until it was repealed the country forced a carbon tax an retailers that greatly increased prices. If customers bitched about the price increases the business owner by law would be facing jail time if he told the truth that it was the carbon tax that did it.

Truthoutthere's picture

Bullshit.That recent blackout in S.A. was caused by high winds knocking over transmission lines.Facts please.

Schlump's picture

It's an excellent idea.

And if the banks spit the dummy, good. Let them leave. Then replace them with state-run banks, like the Commonwealth Bank used to be.

I cannot wait!

yarpos's picture

Yes , because the State Bank of South Australia was such a success wasnt it?

Curiously_Crazy's picture

I thought I better check through the comments to check if someone already corrected the blaring errors in the article.

To correct a part of your correction though, it's "Western Australia" and not "West Australia" and I highly doubt WA will follow suit (I live here).

Truthoutthere's picture

Foreign banks own at least 40% of these Australian banks.Queensland's former premier now works for the banking industry.It is all fucked.Banks don't give a shit about anyone/anything except for making money.The only good banker is a dead one.

Tugg McFancy's picture

These mutherfuckers are backstopped by the government and have access to taxpayer fronted liquidity fund that's allowed them to keep dishing out dogshit loans since the financial crisis. 

Truthoutthere's picture

These fucking banks fuck over farmers in the bad times and take their farms.Very little leeway given.Hello ANZ

trader10's picture

Absolutely right !   The Government is playing as they were the good guys to the public.....   The Prime Minister is an ex - Goldman Sachs boy.... LMAO

 

So.... really ?    What nice guys the Government is...... helping out the tax payers.......lol   what a joke !

 

cheers

 

T10

Truthoutthere's picture

Prime minister Turnbull is a gold-plated waffler.Comes across as very insincere.Lapdog of Amerika.

vega113's picture

You can look at it as banks actually paying for the privilege of accessing almost infinite liquidity when they need it.

dogsandhoney2's picture

i love to lift my leg at the bank.

woof!

Nexus789's picture

Funny that they are pissed off someone got one over them. They spend all their time extracting 'rent' from the Australian economy. 

meditate_vigorously's picture

Our government just takes kickbacks from the criminal banking overlords in the form of "regulatory fines".

peterk's picture

I am a Free market proponent, and live in AUstralia...... this move to impose a tax is a  proper good thing.

Why?

Its because there  are only 4 major banks in Australia, and  they are  the most profitable banks in the world.

European, US banks make diddly squat compared to Aussie banks. Thats why  the aussie banks routinely scoop up foreign banks,  they own alot of foreign banks,  they can afford it.

Australian banks are PROTECTED OLIGOPOLIES, banking  activities are very restriced to competition, and banks are given laws so that all their LOANS to consumers are FULL RECOURSE loans. THis mean that unlike the US and europe, only in Austrlaia and  newzealand to my understanding, is there this full recourse  lending. IT means, that even if you default on your mortgage payments and the bank seizes the house,  YOU must STILL PAY  off any debts after the house is sold (assuming at a loss). You cannot just walk away from the mortgage like in the US and the rest of the world. The debt MUST be paid.

Also  97% of loans in value and number are  VARIABLE rate, meaning that every month the reserve bank meets to decide any change up or down in interest rates, and this gets passed on  immediatley to consumers. But the banks also  raise rates WITHOUT the reserve bank doing anything on their own.. you would think that the  government would try and control  these things given they  issue just 4  bank liscenses , ie non-competitive. but they dont care and allow the banks to guarantee theior profits in any climate.

Australians are to stupid to realise any of this .

So this  small TAX is nothing really, consumers will eventually pay for  it  anyway, it wont effect bank profits, its a non-competitive banking system. There are only 4 main banks.. theres no where to go.

As i offend say, australia has only 2  industries,,, banking and mining..... everything else is expendable and doesnt mean squat.

Imo, the banking industry should be  completely degregulated, so any tom dick or harry  can open up a bank.

But the banks like the LAWS there are that protect them, yet complain  about  LAWS or taxes that hurt them

Trickle up economics and  artificial  laws are ok

But

Trickle down economics and taxes/Laws are NOT ok. LOL

 

That also applies  to most people that promaote free market economics....  FIRST you must destroy the  OLIGOPLIES (FED fiat system) and THEN  you can  deconstruct the WELFARE state. MOST people like to deconstruct the WELFARE state first and then  maybe later on  think about  doing the same to the oligopolies like the FED.

First kill the  FED, then  screw the poor people.... not the other way around.

 

 

syzygysus's picture

Wow! When the Aussie housing bubble explodes it'll really have major consequences. Variable rate loans, full payment needed after foreclosure...sounds like a bloodbath.

factorypreset's picture

"The tax revenues will be used to fund job-training programs"

What does it matter if people don't want to work?

HRH Feant2's picture

Never go full communist. Stupid, stupid idea they will regret.

U4 eee aaa's picture

Full communist? You mean like having a central bank?

hoosiertoo's picture

Betting the banksters are not above using Australia for an object lesson.

 

"Nice country you got there..."

sinbad2's picture

Normally you would be right, but would JP Morgan and Citi risk losing a market to China at the moment?

Yen Cross's picture

  The aussie$ will be on the 60's handle with  'Bernanke Bux' by years end...

litemine's picture

In their money, sales of Beef will be a profitable.

 

sinbad2's picture

Beef wheat wool iron coal uranium copper gold etc would all rise in AU dollar terms.

If the dollar had been lower, Holden might have continued production here.

sinbad2's picture

That would be good, it would help exports and reduce imports.

More exports, equals more jobs and higher wages.

Having a high value currency only impresses the mathematically challenged.

peterk's picture

thats stupid nonsense.

 

an economy does NOT need exports to grow....   its just easier to grow with exports for SOME

compaines like actual exporters.... rich exporting companies are  of no use to  citizens

.

A wealthy country  can IMPORT everything it wants and live a great life, let the REST OF THE WORLD WORK FOR YOU

you dont need to export.

as for that  "creat jobs nonsense.."  plenty of jobs, but they are not well paid.

these are the  one liners that politicians use to justify heloing their rick  freinds who run exporting  companies....

how the hell does a country become RICH by seeking a LOWER  exchange rate... you cant devaule your way to prosperity

Stupid

Baron von Bud's picture

Read the numbers. The banks averaged $5B in profits each year. South Australia's tax will be 280m/4yrs = $70M each year on all five of them or $14M per bank per year.  $14M/$5B = .003 or a tax of less than a third of a percent. The article is fake news or the banks are powerful enough to get this slanted story onto the main news. I have no doubt the govt had asked the banks privately and beforehand to help out. The answer was no because banks take; they don't give back anything ever.

HillaryOdor's picture

Right.  But governments, they give back.  They never take anything.

Amazing brainwashing.

Banks have no power over you.  Everything that has been imposed on you has been imposed by governments.  If it's at the behest of banks then you should hate the government for selling their influence in the first place.  You can't blame the banks or anyone else for buying influence.  They have to or their competitors will.

Sure, the government "asked" for more money.  Because that's how taxes work.  You listen to Bernie Sanders too much.

They government demanded because that's all worthless governments ever do.

sinbad2's picture

However the Government spends the money, it will stay in Australia, instead of going to the US.

HillaryOdor's picture

Right because it's not like politicians ever dip into the treasury and launder stolen funds offshore.  No that never happens. 

And even if it did happen it's somehow more legitimate to some people than a market entity which requires voluntary cooperation and mutual agreement to do business.  Madness. 

You deserve what you get though.  Don't be surprised.

sinbad2's picture

Australia gives the US about $12 billion a year, if I'm going to bribe a politician I would rather bribe an Australian politician than an American politician.

Time for the US to support itself.

uhland62's picture

Indeed. We are no longer in the position to prop up the US who do not spend their money on their people but keep bringing wars to other people's streets. I heard a couple of minutes of Turnbull on ABC 24, switched off when he spoke of Pax Americana. He is becoming a disgrace with his US worsipping kabuki theatre. Pax - which PAX??????

The banks do not pay GST (Sales Tax), I heard yesterday. Here goes their freebie. Reading the book "Gold Warriors' I wondered what the Carlyle Group was. Look at their revenue and assts on wikip. and then at their net revenue that they pax taxes from. The US system is toxic, not a model.   

Truthoutthere's picture

Not when they are buying overpriced fighter jets from the U.S.for 10's of billions or other military crap which doesn't work.

Nexus789's picture

The banks in Australia are effectively a cartel that extracts increasing amounts of 'rent'. The share ownership profile is the same for each bank with the main players being the same for each bank. They have indirectly destroyed what productive capacity the Australian economy had.

waldo simon's picture

7 Australian states, plus ACT where federal Capital is located

Bingo Hammer's picture

Sorry Waldo it's 6 States and 2 Territories

sinbad2's picture

I dare you to say that to the face of a Kiwi.

DrHydralisk's picture

You missed my point. I am a Kiwi. All the major banks in NZ are Australian owned so we are effectly paying this tax also!