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Forget the nasty miners PM, what about the banks?

Chris Gardiner

by Chris Gardiner

11 May 07:26pm

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Filed under: Banks, Federal Budget, Henry Review, Mining Tax

21 comments

I think I’m with the miners – just why did the Prime Minister and Treasurer let the banks and finance groups off the hook when it came to tax reform and revenues for the common good?

Jon Kudelka in The Australian last year.

As one mining industry guy said this week, there’s a whole part of the banking and finance sector involved in ‘moving money around and not creating anything of value’, and which does not pull its weight in revenue generation for the common good.

I’m surprised that a Government, that’s more than willing to run on the theme of ‘nasty foreign extraction companies taking our wealth offshore’, couldn’t have come up with an anti-banks campaign.

Perhaps it was that the Henry Review was strangely silent on this sector’s potential for new tax revenues. Without the prompt from advisers, perhaps the Government just couldn’t conceive the banking and finance sector as a contributor, rather than beneficiary, of its tax reform program.

In any event, as I have suggested before in The Punch, if Australia is looking for a low impact, new revenue source to fund hospital beds, or roads, or superannuation top-ups, why not take the international lead and introduce a new financial transactions tax, what is being talked about globally as the ‘Robin Hood Tax’?

It’s not as if the international financial system can’t make a better contribution to revenue generation and doesn’t need better regulation. By some estimates, a miniscule tax - and we’re talking 0.05% - on the often speculative financial transactions that characterize modern global finance systems can generate funds to build a six room school building in minutes (well, perhaps hours in the case of the BER).

The Opposition Leader is going to have to fund his own new revenue sources for a properly balanced strategy to restore the country’s finances and achieve his key promises. It would be very B. A. Santamari-ish for him to take the fight to the banking system, so maybe the Robin Hood Tax is his opportunity now. And let’s be honest - it is easier to imagine Mr Abbott in Sherwood Forest tights than the PM.

And when it comes to populist campaigns to win support, which campaign is mostly likely to flank the Government’s anti-foreign miner spin? I think it would be one that focused on the banks and their capacity to allocate, for the common good, some of the wealth they are taking from the modern economy.

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21 comments

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    • Daniel says:

      08:13pm | 11/05/10

      Rudd shouldn’t forget about the Miners.However he should also go for the banks too. The Banks are bastards and need to be taxed big time.

      Reply

    • Bruce says:

      09:50pm | 11/05/10

      Daniel: Understand your sentiments, however, if the government tried taxing the banks the same way as the miners, we will all be paying for it big time, through increased interest rates, costs of funds, fees, charges, tighter lending controls and reduced levels of service, reduction in branch outlets and staff. Also, remember just about every person, business, company, government etc, has a foot print through a bank. Wether we like it or not, a strong banking system usually means a strong economy.

    • Craig Lambie says:

      09:16am | 12/05/10

      @Daniel, @Bruce and others are right, taxing the banks is pointless, it will just reduce the amount of “oil” that keeps the economy moving! Finance is in everyone’s lives, whether you need it to pay of your house, or your employer needs it to pay your wages in between the payments from clients.  It is in everyones lives.

      As to the Super Tax, I say bring it on.  Resources are here in Australia and they belong to everyone in Australia.  BHP is 40% foreign owned and Rio Tinto is 70%.  Nothing wrong with charging a little on the Cream they make from our Natural resources.  It might stop a few things in the short term, but long term it won’t stop a thing.  Look at Norway.

      Chris,  I totally agree with the Financial Debits Tax! 0.01% even would be plenty and would potentially stop the larger speculators from playing with our financial system (worldwide).

    • Paul Horn says:

      09:28am | 12/05/10

      Good point Bruce though I don’t agree 100%.  What we need is a lot more competition. If banks were to jack thier fees and charges up it would enable other financial players to enter the market with lower rates and charges.

      This cursed Government in providing guarantees for Bank deposits effectively wiped a lot of non bank financial competitiors out of the game providing the banks with an opportunity to lift mortgage rates and charges. With greater competition Banks have no choice but to drop their rates. Another stupid Rudd interventionist strategy in the markets leading to lower service levels for Joe Blow the punter.

      I say Mr Gardiner is on to a good thing. Banks are vampiric blood suckers, they offer no wealth creation. They simply shift wealth from the average selfish sucker onto their own ledger. This Government has done them a service. Personallly I would have cheered to see the lot of them go under during the financial crisis. Why do we prop up bad business operations? Macquarie Bank made 900 million in revenue last financial year and paid 15 million in tax. Just how the hell do these slimy throwbacks get away with such criminal behaviour.

      And as for stupid comments about our Earths finite resources these 60’s throwbacks proffering such stupidity should really look at the facts. Of total known copper reserves we have mined less than 0.02%, uranium, aluminium etc are all similar. We have barely scratched the surface of mineral deposits and that is based on what is known. Much of this nation remains totally unexplored so who knows the immense bounty that still remains to be exploited.

    • Ryan says:

      10:19am | 12/05/10

      @Craig Lambie: funny that, I just got back from South Africa, seems they have all the same resources we have and mining sure is kicking up a gear there.. I bet they were cheering to hear how stupid our government is, now they will get even more projects.

    • jed says:

      08:47pm | 11/05/10

      oh come on, we know this country has devolved into a real estate development jurisdiction.

      putting extra heat on the banks would force them to either jack their rates or reel in their loans. that would force houses prices to fall because the cost of money goes up and debt isn’t as easy to come by. house prices falling is one thing any government doesn’t want. they wouldn’t go near the banks with a barge pole.

      Reply

    • Brett L says:

      09:00pm | 11/05/10

      Lets be fair about this whole Super Tax. Why not all companies that make over 1 Billion in Net Profit pay the Super Tax? Bank are bastards, they rip off consumers daily, they have a captured audience, and are guaranteed by the people who they exploit. Why do governments protect them so much?

      Reply

    • Brian Tanner says:

      10:17pm | 11/05/10

      Like the Mining Companies, the Banks already pay their fair share of taxes. A strong banking system makes Australia strong. In fact, Australia has 4 of only 10 double A RATED Banks world wide. This strength helped us to survive the GFC & benifits all Australians. If this tax happy government attempted to gouge more from the finance industry, loans for business & individuals would be harder to come by & more expensive.

    • Matt Stewart says:

      10:18pm | 11/05/10

      Why not tax all companies the same way?  Because it’s a terrible idea!  Although, you do have a good point that the mining industry should not be treated any differently.

    • Alice says:

      09:28pm | 11/05/10

      Banks don’t plunder natural resources that belong to every Australian to sell for massive profits.
      Yes, we all agree their profits are enormous but the source of that profit is quite different to the resource tax.
      Let’s not forget the mining industry asked Henry to consider this tax in 2008.
      It’s more efficient easier tax system. That was their arguement.
      Their wish was granted and now they are renegging on their own submission. Helen Ridout was surprised by the mining industries response.
      As she stated, ‘The mining industry got what they lobbied for”.

      Reply

    • mike says:

      09:46pm | 20/06/10

      No they dont - instead they plunder every Australian’s bank accounts instead.  At least mining and manufacturing companies create or add value - banks are purely middlemen

    • Ace Venrtura says:

      10:08pm | 11/05/10

      Impose a super tax on personal loans and credit card profits and create a personal income tax deduction on interest paid on these facilities. The government should make these predatory credit facilities unprofitable for the banks. The banks have no choice because 25% of their profits comes from these loans given helpless borrowers who have no other way of borrowing. This new tax will boost his approval rating.

      Reply

    • Against the Man says:

      06:27am | 12/05/10

      Mr Rudd won’t touch the banks because they store his millions of dollars.

      Reply

    • Howard says:

      06:48am | 12/05/10

      The reason the banks are so profitable, and 4 are in the world’s top 10, is because they don’t really compete.  Does anyone really think that the boards of these banks seriously try to put the other(s) out of business with competition?  They have a captive customer base.  There is no where else to go.  As mentioned above, we all MUST use a bank - any bank.  Westpac put up home interest because it cost more to shift, than pay the interest.

      Reply

    • watchingwithinterest says:

      08:59am | 12/05/10

      Good reason to support non-bank lenders

    • John A Neve says:

      07:51am | 12/05/10

      Chris,

      We have a very bad taxation system, which no one seems to want to fix. So let’s move on to you article.

      The big difference between banks and mines is simple, the mines are using a finite national resources, the banks are not.

      Reply

    • Fine pants says:

      08:54am | 12/05/10

      Resources are a public good, not a private asset generated by the company that mines them. We should all shre in that wealth. Mining companies pay royalties on these which they will get a credit for if the new tax is passed.

      The government has been trying to make Australia a regional financial services hub by encouraging investment in Australia (GOOD FOR US) by lowering tax rates and strengtheing the system.

      To hit them with a tax would undo all this good work.

      Reply

    • Andrew says:

      10:07am | 12/05/10

      I think if the Government taxed bank profits, it probably wouldn’t be passed on. There would be no incentive to increase profits by passing on expenses because those profits would be taxed.

      The other side of the coin is that alot of the investment in mining and banking comes from superannuation. Reducing superannuation growth hurts come retirement time.

      Reply

    • Budz says:

      10:28am | 12/05/10

      What is with this tall poppy syndrome people have with companies that are successful? Do we want to encourage companies to stop striving to provide us with goods and services that we want because they get slugged more by the tax man? Why tax success? We should tax laziness and mediocrity.

      Reply

    • Scott says:

      11:55am | 12/05/10

      As a passing comment, Reform 30/30 should be given a serious look at a federal level. Simplify the whole system.

      Reply

    • Paul says:

      01:07pm | 12/05/10

      Why do we have to pay big $$ to be customers of banks. What happened to those years when banks wanted our custom and were prepared to earn it? Now, the banks earn billions of dollars in super profits and we still pay over $400 per year in bank fees plus mortgage interest, $2.50 to use ATMs etc.

      Tax and regulate the banks. If you tax the super profit mining industry, you tax the super profit financial industry too.

      Reply
 
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