Bank levy on foreign firms in Australia may raise A$800mn

Bloomberg

Australia should extend its new bank levy to foreign financial institutions in a bid to recoup more than the planned
A$6.2 billion ($4.6 billion), according to
cross-bench lawmaker Nick Xenophon.
Applying the tax to foreign banks as well as the nation’s five biggest lenders may recoup as much as A$800 million, which could help fund compensation for victims of financial mismanagement and fraud, Senator Xenophon told the Australian Broadcasting Corp. The lawmaker plans to consult with the opposition Labor Party to determine if it will support his
position.
“I also think it’s important that the foreign-owned banks that have a big presence here in this country also be hit with this levy,” Xenophon told the ABC’s Insiders program. “The big banks are saying, ‘well, if you are going to hit us with this, why aren’t you hitting the foreign banks?’, and I think they have a point.”
Australia plans to raise billions over the next four years by imposing a 6 basis points levy on liabilities over A$100 billion, Treasurer Scott Morrison said in the budget released May 9. The levy will apply to Commonwealth Bank of Australia, Westpac Banking Corp., Australia & New Zealand Banking Group, National Australia Bank Ltd. and Macquarie Group Ltd., according to Treasury.
Those major banks called for foreign competitors including ING Groep NV, HSBC Holdings Plc and Rabobank to be netted by the new tax, according to submissions to Treasury last week in
response to the budget.
Morrison said offshore firms provided competition and the government wanted Australia’s banking system to be competitive when he was asked by reporters on May 19 if he would extend the levy to foreign banks. The levy would also allow smaller regional banks to be able to compete more effectively with their bigger
rivals, Xenophon told the ABC.