Australia’s biggest banks are to be hit with an additional state-based levy on top of a newly legislated national tax after South Australia’s government said major lenders are still not contributing an appropriate amount.
The new levy to be imposed from July 1 by the Adelaide-based government is aimed at raising a total of A$370 million (US$279.2 million) over four years, budget documents released yesterday showed.
It is to apply to the same five lenders that are subject to the federal tax.
The South Australian liabilities of Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, Macquarie Group Ltd’s banking unit, National Australia Bank Ltd and Westpac Banking Corp are each to be levied at a rate of 0.015 percent.
“Major banks are under-taxed,” South Australia Treasurer Tom Koutsantonis said. “They need to contribute their fair share to support our economy.”
While the dollar value of the levy is substantially smaller than the A$6.2 billion federal impost, it is a further sign of how badly relationships between the banks and government have deteriorated across the political spectrum.
The Labor-run South Australian government has clashed frequently with the Liberal-National coalition that governs at the federal level under Australian Prime Minister Malcolm Turnbull.
“It just shows you there’s plenty of political risk” attached to the banks right now, Sydney-based Regal Funds Management analyst Omkar Joshi said.
“It’s only just starting,” he said, adding that the South Australian tax creates a precedent for other provincial governments to follow suit.
South Australia also outlined plans to increase costs for foreign buyers of residential property, echoing moves by regional governments in neighboring New South Wales and Victoria. It is to impose an additional 4 percent conveyancing surcharge from Jan. 1 next year, which is slated to raise A$48.8 million over four years.
Both measures are designed to help repair the finances of the state, which has struggled with the demise of traditional manufacturing industries, including automaking.
Its 6.9 percent unemployment rate is the highest among Australia’s eight states and territories.
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