|NAB: Australian Bank Levy Is Poor Policy
by Mary Swire, Tax-news.com, Hong Kong
Wednesday, May 17, 2017
National Australia Bank (NAB) has described the Government's planned bank levy as "poor policy" and warned that it is a tax on every Australian who benefits from, or participates in, the banking industry.
In its submission to the Treasury's consultation, NAB said the levy cannot be absorbed and will be borne by its customers, shareholders, suppliers, and employees. "It is not possible to increase taxes by this magnitude without it impacting people," the submission argued.
From July 1, a six-basis point levy will apply to Australia's five largest banks with liabilities of more than AUD100bn (USD74bn). The Government expects the levy to raise AUD6.2bn over the forward estimates period.
NAB also criticized the short period of time given to the affected banks to submit comments to the Treasury. It said it had had two days to provide written feedback, which is "highly unusual and reflects poorly on Australia's public policy making process."
NAB requested that the Government produce a Regulatory Impact Statement on the proposal and initiate a period of public consultation on the draft legislation.
NAB also made the following recommendations on the scope of the levy:
- The levy should be applied to the netted derivative balance sheet and collateral position of the affected banks;
- The basis for the levy should be adjusted for the impacts of the accounting gross ups which occur as a function of inter-company transactions;
- The funding of high quality liquid assets should be excluded from the levy calculation;
- Repurchase agreements should be excluded from the calculation of the levy;
- Non-funding liabilities, in particular liabilities and provision for taxes and the levy, should be excluded; and
- If included, only targeted anti-avoidance measures should be contained in the legislation.