Australian Bankers Reject Greens’ Corporate Tax Break Exclusion
Bankers in Australia have rejected the Green Party's idea that banks should be excluded from a corporate tax break because they make excessive profits.
The Greens have released new figures that suggest the four major banks, ANZ, Commonwealth Bank, National Australia Bank and Westpac, would gain a $4 billion windfall over the next decade.
Green leader Sen. Bob Brown said Australia's banking system, being the strongest in the world, needs no further assistance.
"With the growing gap between the rich and poor, and growing domestic and global anxiety about corporate greed, now is precisely the wrong time to be gifting the banks a $4 billion tax break," Brown said.
But the Australian Bankers’ Association on Friday rejected this claim.
Steven Münchenberg, chief executive of the ABA, said “The Greens have their facts wrong. Banks are not making excessive profits.”
“The standard measure of profitability – return on equity - shows banks are in the middle of the pack compared to other industries. Of the 50 most profitable companies listed on the ASX, only two are banks. There is no evidence that banks are making excessive profits.”
According to Australian bankers, banks already contribute more corporate tax than any other industry in Australia.
“The tax office collects around 25 per cent of banks’ profits. In the last five years, banks have paid $33 billion in tax, plus an addition $3 billion for the government’s bank funding guarantee,” Münchenberg said.
Münchenberg said the Greens idea is essentially a tax on people’s superannuation savings and those who rely on bank dividends for income – like self-funded retirees.
“The great majority of bank shares are held by households either directly or indirectly through their superannuation funds and retirement savings,” he said.
The ABA said Australian banks underpin economic growth by providing finance to businesses, keep people employed, keep savings safe and continue to support the financial decisions of Australians.
“Critics, who claim banks are too profitable or who call for a reduction in profits, don’t think through the implications of a weakened banking system, nor are they willing to outline what a safe level of profit should be,” said Münchenberg.