Listen, the bank levy.
Now, don’t call it a tax.
And the reason, we found out yesterday is the levy is tax-deductible.
But a tax, by its very nature, well, it’s not tax-deductible.
Anyway, the levy is set to raise $6.2 billion over the next four years, according to the government.
It’s got to go through the Parliament, but it seems Bill Shorten and Shadow Treasurer Chris Bowen, well they told me and Australia last week, after the budget, that they will not oppose it.
Mind you, they’ll try and make some political mileage by having it assessed inside a Senate inquiry, but ultimately the bank’s campaign to have it overthrown will amount to nought.
So yesterday, the big four banks released reports showing the impact on their profits.
Now, you can see here the after-tax amount… so Commonwealth says it will pay $220 million. Westpac, $260 million. The NAB $245 million and the ANZ $240 million.
Now remember the levies being assessed on the bank’s total liabilities.
Now, the number that looks a bit odd here is the Commonwealth – easily Australia’s biggest bank with the greatest number of liabilities – it says it will pay less than NAB, which is almost half its size.
But add that lot up, and you get $965 million.
There’s still Macquarie to come but $965 million times four… I can do this maths – that’s how the budget works – equals $4 billion give or take.
Now, the government expects $6.2 billion over four years so this is two billion dollars light…
So, it looks like somebody has got their math wrong…either government in the budget, or the banks.
And time will tell.
Now, the one thing here, I guess, that bank balance sheets will grow over time – that could be a part of the answer.
Now, while the banks continue their campaign on the levy, parallels drawn with the Rudd-Gillard-Rudd Mining Taxes – well they’re wrong.
That tax was on profit – super profits – remember when the mining industry collapsed there were no profits let alone super profits so the government didn’t collect a single red cent.
The bank levy, however, doesn’t tax profits.
So, even if the banks have a bad year they’ll still be paying up and that’s what they’re grumbling the most about.
The Dow Jones overnight up by 89 points and the Australian dollar 74.7 US cents.