The South Australia state parliament is in recess for a fortnight. It’s time for Premier Jay Weatherill and his bullish Treasurer, Tom Koutsantonis, to decide if they’ll continue to try to rip off the rest of us for yet more money; this time through the SA version of the Major Bank Levy, which will be inflicted on bank customers throughout the nation.
That’s right, All of us, as it isn’t a tax on SA specifically. It applies equally to the business of the major banks across the country. And no, it won’t be ‘absorbed’ by the banks. Australian experts agree the levy will be passed through to bank customers, and the international evidence supports this case.
The levy will be imposed on selected bank deposits made in Victoria, Queensland and NSW, as well as deposits made in SA. But SA holds only about 7% of the share of Australian bank deposits and loans. This means the vast majority of the levy will be paid for by banking conducted outside SA. In fact the majority of SA’s levy will likely be imposed on deposits from Victoria and NSW alone.
And the levy is likely to feed through to higher mortgage and business interest rates across the country. My mortgage, for a house in NSW, will effectively be feeding the greedy coffers of the SA government. Yet I have no business in SA, my house has nothing to do with SA. I get no benefit from the SA government, my family is not making any use of their hospitals, roads, schools, anything. I’ve only been to the state once and have no plans to go again, not at this rate.
This breaches the principle of ‘no taxation without representation’. How can SA justify imposing a tax on millions of mortgage holders and small businesses outside the state that have no representation or influence on the SA political system at all — and obtain no benefit from the state?
This levy is yet another instance of SA siphoning off funds from the rest of Australia. GST revenue is distributed away from the productive states to SA, and the recent decisions about Australia’s new submarine seem almost entirely designed to prop up that state — at enormous cost to the rest of us. The SA government’s larceny on the rest of Australia is bad enough, and doesn’t need expansion through a new form of bank robbery.
There is an important hope: the SA Opposition has announced it will vote to block the legislation. However, we will have to wait until a final vote in the SA Parliament to be sure the levy is dead. Celebrations of the levy’s demise are premature; it could be revived, just like the Terminator.
Until we can be sure the levy is dead, the battle against the rampaging SA government must continue.
Michael Potter is a Research Fellow in the Economics Program at the Centre for Independent Studies and author of the CIS research report The Major Bank Levy: We’re all going to be hit.