Scott Morrison says the bank levy announced in last week’s budget is permanent but he has no plans to raise it any further in the future.
The 0.06 per cent tax on the big four banks and Australia’s largest investment bank, Macquarie, will raise just over $6 billion to help towards budget repair and was the biggest surprise in the treasurer’s annual statement.
The UK has a similar tax on banks but has raised it several times since its introduction.
“We have no plans to do that whatsoever,” Mr Morrison told ABC television on Sunday.
“We have set it at the levy we think is appropriate and we think is fair.”
The bank chiefs are furious and are threatening to pass on the cost of the levy to their customers and shareholders.
But Mr Morrison insists the banks can absorb the impost.
“If banks think the way to build shareholder value is to fleece their customers then I don’t think that is a very sound business strategy,” he said.
He said the levy was small when compared to the 25 basis-point changes in the cash rate made by the Reserve Bank and at a time at a time when they are enjoying a 20-40 basis point advantage over smaller banks when they raise money in the financial market.
“To suggest this is somehow the end of financial civilisation as we know it is one of the biggest overreaches in a whinge about a tax I have ever seen,” Mr Morrison said.
But shadow treasurer Chris Bowen does not believe the levy is about competition, given the government has only just sought a review on the issue through the Productivity Commission two years after it was recommended in the Murray review of the financial system.
However, Labor does support the levy and, like the government, would make it permanent.
But Mr Bowen believes it was a last minute decision to drop it into the budget because the government was short on cash.
He said the government had not consulted the sector nor taken advice from the Council of Financial Regulators about its impact.
“It was a desperate measure because they were short of cash so they said I know what we’ll do, we’ll dump a bank levy in,” Mr Bowen told Sky News.