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UPDATE 2-Australia lawmakers say they will vote down surprise state bank tax
July 3, 2017 / 7:36 AM / 4 months ago

UPDATE 2-Australia lawmakers say they will vote down surprise state bank tax

* State govt announced surprise A$370 mln bank tax in May

* At least one other state interested, banks complain

* Opposition will block tax with support from independents (Recasts throughout, adds government and industry comments)

By Byron Kaye

SYDNEY, July 3 (Reuters) - Opposition lawmakers in the Australian state of South Australia vowed on Monday to block a state-based bank tax, a win for lenders left reeling when the government unexpectedly unveiled the revenue-raising measure in its annual budget.

Australia’s federal government floated a special A$6.2 billion levy on the country’s top four lenders plus investment bank Macquarie Group Ltd in May, capitalising on a sector that has benefited from a property boom just as it faces a backlash following a series of consumer business scandals.

Banks were already vocal in their opposition to the federal tax when the country’s fifth-biggest state said last month that it would impose its own special A$370 million ($284 million) levy over four years.

If South Australia’s conservative opposition blocks the measure in parliament, it will likely dissuade other state governments from following suit. Larger Western Australia has said it would consider copying the move based on how well it worked in South Australia.

“This is a toxic tax on jobs in South Australia,” state opposition leader Steven Marshall told reporters.

“We are going to block this tax, we are going to put the people of South Australia forward and we are going to create jobs.”

Marshall’s party holds just eight of the state parliament’s 22 upper house seats, but he said his party had the support of three independent policymakers who have already said they would reject the levy. One MP, as speaker, would not be able to participate in any vote on the matter.

The state government has said it would invest the extra revenue and create jobs, and on Monday treasurer Tom Koutsantonis said the government was “sticking to its guns”.

“The government is committed to passing this budget, it has a right to pass its budget,” Koutsantonis told reporters.

The Australian Bankers’ Association, which represents all the lenders affected by the taxes - Commonwealth Bank of Australia, National Australia Bank Ltd, Westpac Banking Corp, Australia and New Zealand Banking Group Ltd and Macquarie - welcomed the opposition’s decision.

“The growing outcry from South Australians about this tax shows they understand it would have a serious impact on ordinary households and the cost of doing business in their state,” association Executive Director Tony Pearson said in a statement.

The state opposition said it would vote against the tax after the close of share trading on Monday.

$1 = 1.3029 Australian dollars Reporting by Byron Kaye; Editing by Shri Navaratnam and Christopher Cushing

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