Now here’s a Tax both Labour and NZ First will like the look of

via ODT

Imagine if on Monday morning, [Auckland] announced it was imposing a tax on New Zealand’s supermarkets.

The [Auckland] mayor explains that the town needs the money and, besides, he adds, the supermarkets don’t pay enough tax on their profits.

It is an idea so idiotic as to be fantastical.

Yet South Australia did much the same thing last week.

Announcing its budget, the South Australian treasurer said the state would impose a levy of 0.015 per cent on the liabilities of Australia’s big four banks as well as our home-grown investment bank Macquarie.

The tax will raise A$370 million (NZ$284m) over four years, and comes on top of the Turnbull government bank levy, announced during this year’s Budget, forecast to raise A$6.2 billion over four years.

And in our case, we would be taxing Australian banks! ?What’s not to like? ?

Most Australians dislike the banks because of high fees, the way they quickly pass on interest rate hikes but hold back on rate cuts, and scandals around the bad financial advice many of them have provided to customers. They are easy targets for a bit of gouging with little risk of electoral backlash.

The federal and South Australian governments have spotted an easy source of revenue and grabbed it.

The business lobby is concerned about the precedent this creates, that any government seeking some extra money can simply snatch it from businesses, for no reason other than being unpopular.

Foreign businesses, too, will be considering the political risk of investing in Australia. ‘Today the banks, but which sector will cop it tomorrow?’ they might well ask.

Oh, that’s well underway with the “Google Tax”. ?Fat-cat overseas businesses are being eyed up all over the world.

There isn’t a tax a politician can’t like.

On its own, the new tax won’t stop capital coming into the country. However, when it’s a lineball decision between investing here and investing somewhere else, the bank tax is the sort of decision that could tip the balance in favour of another country.

If we add a few of those decisions together, the bank levies could prove to be a very expensive policy for Australia, which will eventually reduce employment and tax revenue.

You can bet your life that if Phil Goff could make it happen right now, he’d go for the short term cash and leave the damage for one of the future mayors to cope with.

And populist politicians, as well as desperate ones looking for “game changing” policy may also kick it around to see if the electorate’s dislike of banks is a vote winner.


– Christopher Niesche, NZ Herald