Federal Budget 2017: Savings and groans from big banks as they cough up $6.2b extra in tax

THE big banks will have to cough up an extra $6.2 billion in taxes over the next four years to pay for a crackdown on customer rip-offs.

Treasurer Scott Morrison.

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THE big banks will have to cough up an extra $6.2 billion in taxes over the next four years to pay for a crackdown on customer rip-offs.

Treasurer Scott Morrison pitched the additional revenue and beefed up competition regulations as a way of forcing banks to give their customers a better deal.

The banking regulator will have the right to vet the background of executives and the incentives they are paid, as well as fine employers up to $200 million if their staff are caught ripping off customers.

The new levy will add up to $400 million in the annual tax paid by the Commonwealth Bank, Westpac, NAB, ANZ and Macquarie. However, there is no measure in the package to stop the banks from passing the additional cost on to their customers through higher priced products including mortgage interest rates.

The levy will add up to $400 million in the annual tax paid by the Commonwealth Bank, Westpac, NAB, ANZ and Macquarie

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“We want customers and taxpayers to get a fairer deal from our banks,” Mr Morrison said. “For the system to be fairer, there needs to be greater competition   and accountability — now.”

The banks are expected to fiercely fight the new levy, with the Australian Banking Association chief executive Anna Bligh saying yesterday it would fight any measure which singles the sector out for an ­additional tax. It’s likely they will hone in on how the government has conceded it would use the $1.5 billion extra raised each year in revenue to pay for “budget repair”.

Seven multinational giants, including Google and Facebook, are also in the government’s sights to pay more tax, with Mr Morrison promising to continue the crackdown which has so far raised $2.9 billion this financial year.

The bad banks tax is part of a sweeping package of reforms unveiled in the budget.

Mr Morrison said the new levy — charged at 0.06 per cent of the biggest five banks’ liabilities and hitting their books from July 1 — would offset about half of the $13 billion in dud revenue measures it was forced to drop from the 2014 budget.

Facebook will be among the corporate giants paying more tax.

However, he stopped short from forcing the naming and shaming executives or fining the individuals with oversight of customer rip-offs.

Instead he is giving the Australian Prudential Regulation Authority power to check up on their pay. APRA will also have the power to immediately force the removal of bad executives, rather than being forced to take action against them in the Federal Court.

Treasurer Scott Morrison.

The Australian Competition and Consumer Commission also gets an additional $13.2 million over four years to apply its blowtorch to the banks through a new dedicated team. The ACCC will use its existing powers to investigate whether there is sufficient competition in the banking sector to deliver consumers a good deal on key cost of living measures like credit card and home loan interest rates.

A new authority will also be established to adjudicate disputes with customers. The Australian Financial Complaints Authority will give consumers and small business “free, fast and binding dispute resolution”.

The Australian ­Securities and Investments Commission will oversee the authority. Customers will also have the right to the data banks collect on them, making it easier to get a better deal with another bank.

Originally published as Federal Budget 2017: Savings and groans from big banks as they cough up $6.2b extra in tax