SA’s Upper House rejects bank tax, 10 votes to 11

THE State Government’s controversial $370 million bank tax has been rejected by a single vote in the Upper House in a late-night sitting of Parliament.

• Major UK investment fund rips into bank tax
• Bank tax faces High Court challenge by major banks
• Banks step up fight against proposed levy
• Koutsantonis strikes deal with Dignity Party for bank tax vote

THE State Government’s controversial $370 million bank tax has been rejected by a single vote in the Upper House in a late-night sitting of Parliament.

The Opposition, independent John Darley and Australian Conservatives MPs Robert Brokenshire and Dennis Hood banded together on Wednesday night to remove the levy from the Government’s Budget Measures Bill.

Debate continued to rage but an agreement between the Liberal and Labor parties means the result of the first vote signalled the rejection of the tax.

The 11-10 vote means the fate of the Budget Bill now rests in the hands of Treasurer Tom Koutsantonis.

Mr Koutsantonis is expected to insist the Bill include the just-over $90 million-a-year tax, triggering another vote in the Upper House.

He could opt to split the major bank levy from the Bill — which includes $55 million in tax cuts and off-the-plan apartment discounts, as well as a tax on foreign investors who purchase residential property — but has insisted it must be considered as a “whole”.

He said the Government would continue to advocate for the passage of the Bill.

Mr Koutsantonis earlier told The Advertiser he expected it to be passed in full.

Not long after the vote, he tweeted that the “Major Bank Levy has not been removed from the Budget Bill, Leg Council can’t do that under our constitution. It can only make suggestions”.

Major Bank Levy has not been removed from the Budget Bill, Leg Council can't do that under our constitution. It can only make suggestions.

— Tom Koutsantonis (@TKoutsantonisMP) November 1, 2017

That vote could be held as soon as Thursday, with the possibility it drags on for another two weeks, when State Parliament sits next.

The tax’s defeat prompted a furious response from senior Minister Kyam Maher, who said the Legislative Council had opened the door for a future Labor Opposition to tamper with every Budget.

He insisted the rejection was “unprecedented”.

Opposition Leader Steven Marshall said it would be a “shameful outcome” if the Government stopped providing South Australian small businesses with tax cuts because it refused to drop the bank tax from the Bill.

10.26pm
SA Upper House votes to remove Labor’s state bank tax from Budget Measures Bill.
Labor now threatening to block the passage of their own Budget Measure Bill. Labor threatening both stamp duty and payroll tax concessions.
Shame Labor Shame!#saparli

— Steven Marshall, MP (@marshall_steven) November 1, 2017

“The reality is the only party threatening to block the Budget Measures Bill is the Labor Party,” Mr Marshall said.

“We’ve listened to South Australians and ensured Labor’s massive new tax can’t be inflicted upon households and businesses.”

Shadow Treasurer Rob Lucas said if the Government wants to keep the tax, it should take the issue to South Australians at the March election.

“The Weatherill Government has no mandate to introduce this massive new tax that will ultimately be paid for by South Australian families and businesses,” he said.

“Labor’s State Bank Tax will not pass this Parliament and the Weatherill Government needs to cauterise the damage it is doing to investment and jobs in South Australia by removing the tax from the Budget Measures Bill.”

Mr Koutsantonis could not be contacted but took to Twitter to accuse Mr Marshall of choosing “five east coast banks over 1000’s (sic) of SA small businesses receiving tax cuts of up to $10,000 per year”.

.@Marshall_Steven just chose 5 east coast banks over 1000's of SA small businesses receiving tax cuts of up to $10,000 per year!

— Tom Koutsantonis (@TKoutsantonisMP) November 1, 2017

Premier Jay Weatherill angrily hit out at Mr Marshall on Twitter, accusing him of choosing banks over small business.

You had a choice small business or banks and you chose banks

— Jay Weatherill (@JayWeatherill) November 1, 2017

Only days ago, a major investment fund described the proposed tax as entirely “unreasonable and misguided”.

Jupiter Asset Management, a UK fund that manages more than $80 billion in assets, said it had already reduced its exposure to Australia because of its “increased level of political risk” and said they “strongly urge the protagonists to reconsider’’ the bank tax.

The Australian Bankers Association and Business SA also renewed criticism of the tax, which ABA chief executive Anna Bligh said “will discourage investment, put a handbrake on growth and impact jobs’’.

Ms Bligh said she had written to all state MPs ahead of debate on the tax, urging them to vote it down.

The tax — which was to be levied on the big four banks as well as investment bank Macquarie Group — was budgeted to raise $370 million over four years, with that figure increasing to $417 million in the most recent government estimates.

Both the Treasurer and Premier Jay Weatherill have said that, if pressed, they would fight next March’s state election on the issue.

Business SA chief executive Nigel McBride said it was disappointing that South Australia was attracting international attention for all the wrong reasons.

Banks chiefs had warned the tax would turn SA into a pariah state.