Interview with former RBA Governor Bernie Fraser, who says the proposed levy is “populist”.
Tag: Bank Tax
Treasury response to the Australian Bankers’ Association
The Secretary to the Treasury, John Fraser, today responded to a letter from the Chief Executive Officer of the Australian Bankers’ Association to the Treasurer regarding the major bank levy.
Dear Ms Bligh
Major bank levy
I refer to your letter to the Treasurer of 12 May 2017 concerning the major bank levy announced in the 2017-18 Budget. The Treasurer has asked me to respond on his behalf.
I understand the interest of the industry to obtain modelling information on the levy. As is usual practice we will be providing further relevant information including a regulatory impact statement canvassing the broader economic impacts, compliance issues and revenue estimates as part of the explanatory material accompanying the draft legislation when it is introduced into Parliament.
The levy’s inclusion in the Budget followed development as part of normal budget processes. Through those processes, careful consideration was given to the design of the levy, the costings and to its effect on the economy as well as the financial sector. This consideration drew on Australia’s experience with and development of financial sector levies over a number of years and international experience.
As is the case for other revenue and expenditure decisions, Budget Paper No. 2 this year shows the fiscal balance impact of the measure over the forward estimates period and Budget Statement No. 3 also shows the underlying cash balance impacts over the forward estimates.
Given the deadlines required to allow for introduction and passage of the relevant legislation before the announced commencement date for the levy, officers in my department are working with the Office of Parliamentary Counsel to prepare draft legislation as swiftly as possible to provide to the major banks for their comment.
We appreciate the written submissions that the major banks have now made to us following the meeting on 11 May 2017 and the many constructive comments therein
Banks seek to delay levy implementation
The Australian Bankers’ Association (ABA) has called for the “usual consultation and policy processes” prior to the implementation of the bank levy contained in last Tuesday’s federal budget.
In a submission to Treasury on the major bank levy, the ABA said the budgetary measure is “rushed” and “not in keeping with the government’s own best practice guidelines”.
The levy would impose a tax of 6 basis points on the assessed liabilities of the ‘big four’ and Macquarie.
In its submission, the ABA called on Treasury to conduct a detailed regulatory impact status before the bank levy bill is introduced to Parliament.
In addition, the ABA repeated its calls for increased modelling on the economic and taxation impacts of the proposed levy.
The bank lobby group also pointed to the short consultation period on the draft legislation, which is set to be finalised before the bill is introduced to Parliament on 31 May 2017.
“The ABA are alarmed with the truncated time for consultation, as well as the fact there was no prior consultation, nor will exposure draft legislation be released for public comment,” said the submission.
“The ABA believes there is further opportunity for consultation as the tax will only be levied for the first time on 30 September 2017.”
The ABA also argued for a more “co-ordinated consultation” with all the affected regulators, including APRA, ASIC, the AOFM and the RBA.
“For example, the ABA believes it is crucial that Treasury and APRA be given adequate time to assess if the bank levy is consistent with developments in prudential regulation such as the unquestionably strong requirements and Total Loss Absorbing Capital (TLAC),” said the submission.