Australia’s major banks have responded to the bank tax announced in the 2017 Federal Budget by saying that the cost will ultimately fall on the shoulders of customers and shareholders.
Westpac, NAB and the Commonwealth Bank all released statements today pointing out the impact the new tax would have on bank customers.
“The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees,” said Westpac Group CEO, Brian Hartzer.
Hartzer seemed particularly disappointed in the new tax, saying that it, “implicitly favoured large foreign banks over Australian banks operating in their home market.”
According to Hartzer, international examples where a similar tax had been introduced had much lower corporate tax rates than Australia to begin with, such as the UK, where the corporate tax rate is 20%.
He added that, “Australian banks are already the largest taxpayers, with Westpac the country’s second largest taxpayer. Westpac already pays over 30% of its profits in tax and this will now increase even further.”
Earlier this week, Westpac announced a cash profit of more than $4 billion, contributing to a total $15.7 billion annual profit from the Big 4 banks.
CEOs from the other major banks had similar opinions.
NAB CEO Andrew Thorburn said, “It is not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our industry.”
He added that, “A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community.”
CommBank CEO Ian Narev’s comments were subdued, saying that, "As with the many recent new regulatory imposts, we need to take some time to work through the implications. This is particularly so given the lack of detail and the absence of any consultation.”
But he did echo the sentiments on other big bank CEOs when he said that, “as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.”
ANZ’s statement was short and said that, “At this stage it is too early to provide a definitive estimate of the financial impact on ANZ.”
At the time of writing, Macquarie, the other major bank affected by the new tax, had yet to release a statement.