A comparable landscape: Ascertaining the policy in Australia’s bank levy
One of the more surprising announcements was the proposal of a bank levy targeting the five major Australian banks. The banks in turn opposed what they viewed as an ostensible revenue grab. 2
A notoriously short consultation period 3 for the immediately affected stakeholders was followed by the release of draft legislation a few weeks after the Budget announcement.
The explanatory memorandum accompanying the Major Bank Levy Bill 2017 attempted to reflect a more principled approach than the justifications expressed in the Budget paper — albeit still less cohesively articulated when compared to some other jurisdictions which have adopted similar measures in recent years, and which the Australian levy seeks to align itself with.
Indeed, while the Australian bank levy only applies to Australian banks, the Australian bank levy cannot be viewed in isolation, without reference to the international picture and the international regulatory frameworks which have come into place following the global financial crisis of 2007-08. However, given certain idiosyncratic features of the Australian bank levy, such a comparison raises further questions.
In a recent article, published in The Tax Institute's journal for corporate tax practitioners, The Tax Specialist, Priscilla Varsanyi* explores the policy reasons for the implementation of the bank levy in Australia, and discusses whether the design of the levy is appropriate in light of the objectives stated by the government. To this end, the article also considers the experiences of certain European countries which have implemented a bank levy in recent years and, in particular, the policy rationale employed in those instances.
* Priscilla Varsanyi is a Senior Tax Analyst with Deloitte Australia.
1 See, for example, J Eyers, “Shock ‘stealth tax’ could weaken sector”, Australian Financial Review, 11 May 2017; and T Boyd, “Treasury’s embarrassing tax debacle”, Australian Financial Review, 12 May 2017.
2 See, for example, J Eyers, “Shock ‘stealth tax’ could weaken sector”, Australian Financial Review, 11 May 2017.
3 NAB noted in its Senate submission that it had only 39 hours to respond to the draft exposure legislation: NAB, submission no. 5 to the Senate Economics Legislation Committee in relation to the Major Bank Levy Bill, 15 June 2017.