May 23, 2017

Government stumbles on banking levy, while banks give standard complaints

The government initially claimed the bank levy would help financial competition. That rationale has vanished amid questions over how much the levy will actually raise, Bernard Keane and Glenn Dyer write.

The government's previously strong position on its bank tax started to wobble yesterday, with plenty of help from the banks and Labor. It produced two separate but closely related issues: how much money the levy would raise, and the tax deductibility of the government's proposed levy.

The levy is tax deductible -- that much was confirmed by the government, after the banks began releasing their estimates of their likely liabilities. But had the government taken that into account when it calculated it would reap $6 billion over four years from it? Yes it had, the government eventually, after some confusion yesterday afternoon, insisted. The impact of the levy in the first year (that's 2017-18, starting in just over a month) would be felt in company tax returns for 2018-19, which is why the levy revenue estimates varied across the next four years in the budget.

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4 thoughts on “Government stumbles on banking levy, while banks give standard complaints

  1. Dog's Breakfast

    Why would you design a levy and then make it tax deductible? Doesn’t sound like the most direct route from A to B. Is that just so they can say it is a levy and not a tax hike?

  2. klewso

    The cost of fig-leaves these days?

    1. Ian Roberts

      But fig leaves DO grow on trees! 😉

  3. AR

    Yet another reason to tax all corporate turnover, no deductions, no fiddling, no transfer pricing, no probs.
    And don’t forget the Tobin tax, a fraction of one percent on all financial churning and lotsa luck avoiding that.

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