Terry McCrann: Everyone will lose out with banks $6b tax

THE financial reality of the $6 billion bank tax is clear and totally undeniable — you will pay every cent of it, writes Terry McCrann.

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THE financial reality of the $6 billion bank tax is clear and totally undeniable — you will pay every cent of it.

You will pay it mostly as a borrower or depositor — paying a slightly higher interest rate on your home loans, getting a slightly lower rate on your deposits; or alternatively, you will pay it as a shareholder in one or more of the big banks.

BANK CHIEFS: YOU’LL PAY FOR $6B TAX HIT

You might not know it, but almost every adult Australian is a shareholder — through their super.

The single biggest, and in recent years consistently best, investment of super funds has been in the big four banks.

Now, the tax is not the end of the world so far as the banks’ profits or their combined strength is concerned.

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The adjustments to those interest rates and the impact on bank profits and dividends will be small, writes Terry McCrann.

The adjustments to those interest rates and the impact on bank profits and dividends will be small.

But it’s effectively like lifting the company tax for big banks, and only the big banks, from 30 to 33 per cent.

And doing so, precisely at the time when the government is trying to cut the corporate rate from 30 to 25 per cent, including for those very same big banks.

And arguing — and none more often and more aggressively than Treasurer Scott Morrison himself — that it is vital to cut the tax on business, including big banks, in order to create investment and jobs.

So either way, whether or not the government succeeds in getting the company tax rate down, big banks will pay a higher tax rate than multinationals like Exxon, Google and Apple.

It’ll either be 33 per cent versus 30 per cent, or 28 per cent versus 25 per cent.

If the multinationals pay it of course. The government can be more confident of getting tax out of CBA than out of Google. Because, ultimately, the tax out of the CBA really comes from you.