The Government will not proceed with Labor’s Bank Deposit Tax. This decision adopts a key recommendation of the Financial System Inquiry and comes after extensive consultations with stakeholders and the community.
Labor’s proposed Bank Deposit Tax would have imposed costs of $1.5 billion on Australians with bank savings.
It would have damaged competition in the banking sector by putting regional and community banks at a disadvantage relative to the big four banks, further disadvantaging hard working Australians.
The Labor Party announced this tax on the eve of the last election. Then Treasurer Chris Bowen booked the revenue – with a start date of 1 January 2016 – but failed to legislate the change.
Labor’s Bank Deposit Tax would have penalised Australians for being financially responsible.
This Government is in the business of protecting Australians’ savings – not raiding them.
Our action today reflects the Government’s determination to deliver lower, simpler and fairer taxes.
We have scrapped the carbon tax, scrapped the mining tax and delivered the biggest tax cut ever to small business. The Government has also dumped Bill Shorten’s raid on inactive bank accounts. In total we have reduced the overall tax burden on Australians by nearly $7 billion since coming to office.
We want to continue lowering taxes on the Australian people, including addressing the harmful effects of bracket creep. It is clear that tax reform is needed so that Australians aren’t discouraged from working more, earning more and investing more.
A stable, well regulated financial system is critical to our economic confidence and prosperity. The Australian Prudential Regulation Authority is taking steps to strengthen the Australian banking sector by bolstering bank capital levels, reducing the risk of failure and mitigating the costs if a failure does occur.
The Government remains committed to guaranteeing deposits up to $250,000 per account holder, per financial institution.
We will respond to other recommendations of the Financial System Inquiry in due course.
1 September 2015