Proposed bank deposit levy abolished
The Government has announced that it will not impose a levy on bank deposits, a measure that was expected to raise $2 billion in revenue over four years.
The Government’s loss is, however, bank customers’ gain. The bank deposit levy had been proposed the then Labor Government and the revenue had already been factored into estimates by the Coalition.
The 0.05 per cent levy would have applied to all bank deposits up to $250,000, and the revenue raised would have served as insurance, by means of investment in a Financial Stability Fund in the event of a bank collapse.
"The last way to make our banks strong, the last way to protect depositors, is to hit banks with more taxes. That's the Labor way. It's not the Coalition's way," Mr Abbott said.
Not surprisingly, the major banks and the Australian Bankers' Association have welcomed the decision.
We shouldn't be taking up a deposit levy IF the banks were allowed to pass on that cost to investors/depositors.
The concept was okay because it was to raise govt. funds to ensure our banking industry remains safe and can ensure that people with $250,000 held in separate financial institutions remain guaranteed of their money being paid to them, even if that particular bank collapses.
What should have a LEVY on it and would raise incredible amounts of funding is a BANK money transfer tax/levy. This would be a cost to the bank only and would bring in even more to the government guarantees that they must meet.
Banks are oligopolies and therefore not really subject to market forces.... they are the market forces! Hence, they should be made to contribute to the need for governments to guarantee ordinary Australians that their life savings are safe.
These finacial megacorps earn BILLIONS every year, they CAN afford to contribute to their own backup or support mechanisms. Why should the Australian government cough up money because banks get too greedy and collapse in the next stage of the financial crisis (many say it will hit quite badly in early 2016 but I have heard that before). Another case of 'privatise your profits and socialise your losses'.
ALSO to be remembered is this govt guarantee also gives overseas investors confidence in our financial system and hence, even more profits for BANKS and investments for Australia. So they do have a very good obligation to contribute.
Example... you may not be rich but have just sold your home and getting ready to go into a 'village' and the bank fails.... without this guarantee, you lose ALL your savings not just the amount over $250,000.
NOTE: If you have more than $250,000 in savings, then you should put amounts of $200,000 (to allow for interest) into different financial institutions because you will be covered then. It is based on the $250,000 guarantee for each institution not each person. When you are looking to deposit funds, ensure the bank is part of this Govt Guarantee scheme. I know the Commonwealth Bank is, so I assume the other big Aust (by name only) banks are as well and other banks such as MeBank.