There have been plenty of attempts to confuse the public over who pays the Major Bank Levy. While it is supposedly a tax on the five major banks of about $1.6 billion per year, it will actually end up being a tax on mortgages, as argued by Australian experts and the international evidence.
This extra tax on households occurs when personal taxes are increasing — including through bracket creep — and wages are flatlining. Businesses interest rates are also likely to rise, which will result in reduced investment; which is already perilously low. And the harmful effect of the levy on GDP could be almost double the harm caused by a personal tax increase of the same size.
But don’t believe the illusion that the levy’s impact is ‘small’. Government should never allow a bad policy to slip through just because it is small, otherwise we would see millions of small but bad decisions implemented — creating an enormous problem.
In addition, the government has rightly condemned a proposed increase in the top personal tax rate to 49%, which raises similar revenue to the bank levy. If this arguably small, but bad, decision can be criticised, so can the bank levy.
And there is another implicit trick in this argument: it assumes the levy will always be ‘small’ in size. However, the levy could easily be increased to more harmful levels — the UK’s equivalent levy was reportedly increased nine times.
Other trickery includes incorrect assertions the levy will: improve bank resilience, help maintain Australia’s credit rating, align Australia with other developed countries, and offset supposedly ‘unfair’ big bank advantages. All these arguments are dissembling.
We don’t need these ongoing lessons in obfuscation. A poor policy such as the bank levy should be seen as such and not be hidden by all these illusionist’s tricks.