Greens want big bank levy

Minor party suggests new tax on big banks

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Australian Greens have proposed a new tax on the big four banks, in exchange for the federal government's protection to ensure they do not fail.

Greens deputy leader Adam Bandt said today that it was time the big banks paid their fair share to taxpayers and the community. The minority party has proposed a 0.2% fee on all bank assets above $100 billion, which would apply to ANZ Bank (ASX: ANZ), Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corporation (ASX: WBC).

The big four banks made a combined profit of $25 billion in 2012 and are projected to make $27 billion in profits in 2013.

The Australian Bankers Association (ABA) has rejected the move saying the majority of bank profits have been paid out to shareholders, many of whom are retail investors and superannuation funds. ABA chief executive Steven Munchenburg said that the banks had paid out $19 billion in dividends last year, and have paid out $82 billion in dividends.

He also added that the levy would hurt small businesses and the economy, as there would be less incentive to lend to small businesses, or the banks would have to increase the prices at which we lend.

Ratings agencies have assigned AAA credit ratings to Australia's big four banks, mainly because of the implied support of the Australian government, because they are "too big to fail". That has meant that the big four have been able to access funding much more cheaply than their regional and smaller competitors, allowing them to offer cheaper loans and gain a 90% share of the mortgage market.

Foolish takeaway

A levy on the banks assets appears to be a short-sighted attempt to bring in an estimated $11 billion in revenues. If it was introduced, the banks would in all likelihood pass on the costs to depositors and borrowers. Maybe the government needs to revisit its implied guarantee and if they are too big to fail, then surely that's the real issue?

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »