The SA Bank Tax is just more GST

Mr Koutsantonis (SA Treasurer) and Mr Weatherill (SA Premier) are not backwards in making this claim…

“Reports show that financial services are significantly undertaxed by more than $4 billion per annum because their GST treatment differs from other industries,” he said.

“States previously applied taxes to banks and the financial sector, yet gave those revenue streams up as part of the introduction of the GST.”

So if the South Australian government wants to increase revenues by adding a bank tax as they don’t get enough GST from the banks, if they want to place a “proxy GST” on financial supplies, then please banks, remember that the GST is a tax on consumers… So as all other businesses do, pass on the tax onto your consumers. That is how the GST works!

BUT, as only the South Australian government is getting this tax, this extra GST replacement, then the banks should only pass on the tax to the residents of South Australia.

Please banks, raise the home loan interest rates of those residences in South Australia. Please banks, reduce the deposit interest rates for South Australians. Please banks, do not reduce dividends as that would be passing the tax onto residents of other states (and I have lots of bank shares…).

Not only does this passing on the bank tax to the residents of South Australia create the correct incidence of tax to mimic the GST, but it also would be really, really funny seeing how the SA Treasurer and Premier are going to splutter about the banks doing this…

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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