Budget 2017: $6bn bank levy hit a ‘stealth tax on us all’

The government’s $6bn tax on the big banks was a ‘stealth tax’ on the life savings of millions of Australians.

The federal government’s $6 billion tax on the big banks was a “stealth tax” on the life savings of millions of Australians, Westpac chief executive Brian Hartzer said yesterday.

“It’s a stealth tax on their life savings, the shares in their superannuation accounts, and it will make Australia’s banks less competitive,” he said in a hard-hitting statement as the big banks brace for a war of words with the federal government over the tax announced in Tuesday’s budget. Mr Hartzer said there was no “magic pudding” which could absorb the cost of the proposed levy, which is set to raise $6bn from Westpac, CBA, National Australia Bank, ANZ and Macquarie Bank over the next four years.

“The cost of any new tax is ultimately borne by shareholders, borrowers, depositors and employees,” he said.

Mr Hartzer’s comments were echoed by the chief executives of the other major banks as they began to calculate the full impact of the cost of the tax.

Representatives of the five banks affected will meet in Sydney and Melbourne today to learn from federal Treasury officials about how the new tax will work, while bank analysts warned that the new tax would flow through to bank profits and see dividends cut.

In a letter to staff yesterday, Commonwealth Bank chief executive Ian Narev described the proposed tax as “bad policy” which could hit bank customers and shareholders and would be a “tax on all Australians” who held bank shares through their superannuation savings.

“This is bad policy and we need to call that out,” he said in an email to bank staff.

“There was no consultation with the banking system about a tax that will impact on economic growth and the strength of our banks.

“It is a simple fact of business that every extra cost needs to be borne by customers or shareholders or a combination of both. There is no such thing as a cost being absorbed.”

Mr Narev said the Commonwealth Bank was already Australia’s largest taxpayer.

“Now our tax rate has been ­increased further, making Australia’s banks among the most highly taxed banks in the world.”

Mr Narev rejected suggestions by Scott Morrison that the budget night levy was similar to other taxes imposed on banks overseas. He said the big Australian banks had paid almost $5bn in fees to the government to pay for guarantees issued at the height of the global ­financial crisis nine years ago.

National Australia Bank chief executive Andrew Thorburn said the tax would “impact millions of everyday Australians who are ­employees, customers or shareholders of banks”.

“It’s not just a tax on a bank. It is a tax on every Australian who ­benefits from and is part of our ­industry,’’ he said.

He said these people included 10 million NAB customers, depositors and borrowers, 570,000 direct NAB shareholders, which included “retirees, and mums and dads who are building their nest egg for the future”, as well as the millions of Australians who owned shares in NAB through their superannuation funds.

ANZ chief executive Shayne Elliott described the tax as “regrettable policy” which was a “tax on the millions of ordinary Australians who are bank shareholders and customers”.

The new tax failed to recognised that the banking sector was already the largest taxpayer in corporate Australia, contributing $11.5bn each year, he said.