FT: Australian Banks Face A$6.2bn Balance Sheet Tax:

Lenders face new levy as Canberra looks to balance budget and keep triple-A rating

Australia’s big banks are to bear the brunt of a new tax on balance sheet liabilities, as the country’s treasurer revealed an annual budget aimed at returning the country to surplus and preserving its triple-A sovereign credit rating.

As part of Australia’s annual budget presentation, treasurer Scott Morrison said the government would impose a tax on balance sheet liabilities that will raise an estimated A$6.2bn (US$4.6bn) over four years.

“The levy will only affect our five largest banks with assessed liabilities of A$100bn or more,” Mr Morrison said, adding that the 0.015 per cent quarterly tax would affect “corporate bonds, commercial paper, certificates of deposit and tier-2 capital instruments”, but exclude deposits by individuals and businesses.

Australia’s four big banks — Commonwealth Bank of Australia, Westpac Bank, National Australia Bank and ANZ Banking Group — are among the country’s largest companies by market value and most profitable, reporting combined profits of A$30bn in the 2015-16 financial year.

Shares in the “big four” all fell at least 2 per cent on Tuesday, as news of the tax leaked during the trading day, wiping A$14bn from their combined market capitalisations. The fifth bank affected by the levy is Macquarie Group.

The Australian Bankers’ Association said the levy was “bad policy” introduced without consultation. “There is a potential for the stability of our banking system to be undermined by this type of reckless move,” Anna Bligh, ABA chief executive, told Sky News.

However, analysts said lenders would probably pass the tax to their customers by increasing mortgage rates, despite fears it could fuel anti-bank sentiment.

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