Small banks launch anti-bank levy campaign

Small financial institutions have launched a campaign urging the Abbott government not to go ahead with a bank deposit levy because it will hurt people’s savings.

FinanceMinister Mathias Cormann said on Sunday the government would make its final decision on the levy, which was first announced by the previous Labor government in 2013, when it responds to the Murray financial system inquiry in the ‘next few months’.

The Customer Owned Banking Association, which represents small institutions such as building societies and credit unions, has embarked on a television and radio campaign saying the tax is ‘anti-saver, anti-competitive’ and against recommendations of the Murray review.

‘It will hit Australians trying to save for their future in the simplest and safest way,’ the association’s boss Mark Degotardi said on Monday.

The levy on deposits is being considered to pay for a government guarantee should a bank suffer default, but the Murray inquiry has instead recommended banks increase their capital requirements.

The association’s own research shows most people don’t know that savings accounts are already heavily taxed and about a third believe they are taxed in the same way, or more favourably, than property, shares and superannuation.

‘This perception is plain wrong,’ Mr Degotardi said.