Australian Banks Face ‘Pandora’s Box’ Of Taxes After State Hike:

Reuters | By: Byron Kaye and Jamie Freed | Fri Jun 23, 2017 | 2:27am EDT:

A second Australian state on Friday said it was open to charging its own bank tax, raising fears the federal government has opened a “Pandora’s box” by slapping a A$6.2 billion ($4.7 billion) levy on major lenders in its May budget.

A day after South Australia state infuriated the banking sector by announcing a A$370 million tax on five big lenders, Western Australia said the option was “attractive” and analysts warned investors to brace for more tax hikes.

“I’m not going to pretend for a moment that it is not an attractive option … I remain open to it,” Ben Wyatt, treasurer of resources-rich Western Australia, told the Australian Broadcasting Corp.

While a state bank tax was not currently being considered, Western Australia was watching how it went in South Australia, he said.

The federal and South Australian taxes will apply to the so-called “big four” banks – Australia and New Zealand Banking Group Ltd (ANZ.AX), Commonwealth Bank of Australia (CBA.AX), National Australia Bank Ltd (NAB.AX) and Westpac Banking Corp (WBC.AX), plus top investment bank Macquarie Group Ltd (MQG.AX).

Shares of ANZ, Commonwealth Bank, National Australia Bank and Macquarie fell about 1 percent on Friday, in a flat overall market, while Westpac was also flat.

“Pandora’s Box is officially open,” UBS said in a research note. “As suspected, the recent announcement of the Federal Bank Levy has already led to higher taxes on the banks.”

 

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