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| Bank levy is 'such a bad tax', says NAB head and former Treasury boss | Bank levy is 'such a bad tax', says NAB head and former Treasury boss |
| (35 minutes later) | |
| The former Treasury secretary Ken Henry has furiously criticised the proposed $6.2bn bank levy, saying the government has misled voters by pretending bank customers and shareholders will not have to pay for the tax. | The former Treasury secretary Ken Henry has furiously criticised the proposed $6.2bn bank levy, saying the government has misled voters by pretending bank customers and shareholders will not have to pay for the tax. |
| Henry, the chairman of the National Australia Bank, demanded a public inquiry into the levy, saying it was a huge step backwards and reminded him of policies from the 1970s. | Henry, the chairman of the National Australia Bank, demanded a public inquiry into the levy, saying it was a huge step backwards and reminded him of policies from the 1970s. |
| He told the Australian Financial Review the levy was proposed without comprehending its impact on the stability of the financial system. | He told the Australian Financial Review the levy was proposed without comprehending its impact on the stability of the financial system. |
| It had upset the governance arrangements of the financial system, disrupting the roles of the Reserve Bank, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, he said. | It had upset the governance arrangements of the financial system, disrupting the roles of the Reserve Bank, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, he said. |
| “I honestly think that, having at long last introduced the GST 25 years after the Asprey report recommended it, after going through all that pain about introducing broad-based taxes, to have an Australian government go back to some pre-1980s mindset, a government that is capable of introducing a tax like this made me wonder when will we have a 32% [wholesale sales] tax on iPads and iPhones,” he told the AFR. | “I honestly think that, having at long last introduced the GST 25 years after the Asprey report recommended it, after going through all that pain about introducing broad-based taxes, to have an Australian government go back to some pre-1980s mindset, a government that is capable of introducing a tax like this made me wonder when will we have a 32% [wholesale sales] tax on iPads and iPhones,” he told the AFR. |
| “I thought that we had all agreed as a community that this is a very bad way to structure a tax system.” | “I thought that we had all agreed as a community that this is a very bad way to structure a tax system.” |
| Henry said Apra had told the major banks they would be able to use their retained earnings to satisfy new liquidity targets, but the government had upset that by viewing bank profits as a new source of revenue. | Henry said Apra had told the major banks they would be able to use their retained earnings to satisfy new liquidity targets, but the government had upset that by viewing bank profits as a new source of revenue. |
| “The government has just walked straight into that and said ‘we’re going to have those retained earnings to fill a hole in our budget’ so I cannot believe the government consulted with Apra before making this announcement,” Henry told the Australian. | “The government has just walked straight into that and said ‘we’re going to have those retained earnings to fill a hole in our budget’ so I cannot believe the government consulted with Apra before making this announcement,” Henry told the Australian. |
| “I reckon this tax – because it’s such bad tax policy but also because of the way it intrudes into the proper regulation of the financial system – should be put before an open public inquiry. | “I reckon this tax – because it’s such bad tax policy but also because of the way it intrudes into the proper regulation of the financial system – should be put before an open public inquiry. |
| “There should be an open public inquiry because the tax lacks policy coherence both in respect of tax policy and in respect of financial system regulation,” he said. | “There should be an open public inquiry because the tax lacks policy coherence both in respect of tax policy and in respect of financial system regulation,” he said. |
| The government announced a $6.2bn banking levy in its budget last Tuesday. | The government announced a $6.2bn banking levy in its budget last Tuesday. |
| The big four banks – ANZ, Westpac, NAB and Commonwealth – will each be expected to pay in the region of $300m to $400m every year under the levy. Macquarie, the fifth-largest bank, will also be expected to pay the levy. | The big four banks – ANZ, Westpac, NAB and Commonwealth – will each be expected to pay in the region of $300m to $400m every year under the levy. Macquarie, the fifth-largest bank, will also be expected to pay the levy. |
| The treasurer, Scott Morrison, has publicly implored the big banks not to pass on the levy to customers, but the banks sought crisis talks with Treasury officials last week and emerged to say officials had failed to answer basic questions. | |
| The Australian Bankers’ Association has not ruled out launching a multimillion dollar advertising campaign to try to defeat the levy. | The Australian Bankers’ Association has not ruled out launching a multimillion dollar advertising campaign to try to defeat the levy. |
| The industry has called for foreign banks to pay the bank levy, and for the government to introduce a sunset clause so the tax ends when the budget returns to surplus. | The industry has called for foreign banks to pay the bank levy, and for the government to introduce a sunset clause so the tax ends when the budget returns to surplus. |
| Henry helped John Howard and Peter Costello implement the GST in the late 1990s, which replaced a list of “iniquitous” taxes, such as the wholesale sales tax, that predated Bob Hawke’s prime ministership, he told the Australian. | Henry helped John Howard and Peter Costello implement the GST in the late 1990s, which replaced a list of “iniquitous” taxes, such as the wholesale sales tax, that predated Bob Hawke’s prime ministership, he told the Australian. |
| “Until this budget I had thought that these things were gone forever, that no future Australian government would go back to those sorts of taxes,” he said. | “Until this budget I had thought that these things were gone forever, that no future Australian government would go back to those sorts of taxes,” he said. |
| “That is, I thought that by the time we’d introduced the GST on 1 July 2000, the policy mentality that had given us the wholesale sales tax, financial institutions duty, bank accounts debits tax — I thought that mentality was dead and buried. And it turns out it’s not.” | “That is, I thought that by the time we’d introduced the GST on 1 July 2000, the policy mentality that had given us the wholesale sales tax, financial institutions duty, bank accounts debits tax — I thought that mentality was dead and buried. And it turns out it’s not.” |
| Malcolm Turnbull rejected Henry’s view. “He knows as well as I do that the banks can well afford to pay this,” the prime minister told ABC radio on Tuesday. | |
| “I can see there’s obviously complaints about it from the big banks - you’d expect that - but it’s very similar to levies of this kind in other countries,” he said. |