Wednesday, December 15, 2010

Why not tax bank super profits? - 88 per cent

An overwelming majority of Australians believe there's a case for banks to be subject to a super profits tax of the kind to be applied to mining companies.

A poll conducted by the Australia Institute just ahead of this week's announcement of the government's banking package found an extraordinary 81 per cent felt the question of a banking super profits tax should be discussed at next year's tax summit.

By contrast, a much lower 67 per cent wanted mining super profits on the agenda.

Particularly striking was support for idea among Coalition voters, 77 per cent of whom wanted it discussed. 83 per cent of Labor voters wanted bank super profits discussed at the summit and 87 per cent of Green voters.

The results took Institute executive director Richard Denniss by surprise. He had added the question about banks to the taxation survey almost as an afterthought.

"I expected support for discussion of the mining super profits tax. That idea is well understood. But while I knew there was hostility to the banks... I didn't expect overwhelming support for the idea we should tax their super profits away if we can't regulate them away."

"Both the mining companies and the banks earn super profits - the miners have privileged access to our minerals and the bankers have privileged access to the funding system," he told the Herald.

"Both earn well above the amount needed to reward someone to do the job."

The Institute will today present the Senate inquiry with figures culled from the annual reports of Westpac, the ANZ, National Australia and Commonwealth banks showing that on all three standard measures their interest expenses fell during 2010.

The Commonwealth's interest expenses fell from 21.2 billion in 2009 to 20.3 billion in 2010; its interest expense as a share of liabilities fell from 3.6 to 3.3 per cent and its interest expense as a share of assets fell from 3.4 to 3.1 per cent.

"These are their own figures," said Dr Denniss. "It is interesting that none of the big four cite their own annual reports in their submissions to the inquiry. They are telling their shareholders about the good job they are doing keeping interest expenses down while telling the public and the parliament their interest costs are rising."

"What's good enough for the miners should be good enough for the banks. We will be telling the Senate that if in 12 months time bank profits have gone up not down in the wake of the Treasurer's package it should consider a super profits tax."

Commonwealth Bank chief Ralph Norris will also give evidence at the hearing today along with ANZ chief Mike Smith and Bendigo and Adelaide Bank managing director Mike Hirst.

Published in today's SMH and Age

Tax Summit by Last Election Vote

Bank Funding Costs

Related Posts

. Swan's symbol. Should the banks be scared?

. Wednesday column: Swan's second chance

. Swan's plan: Counterbalancing banks

. Reserve calls banks bluff