Westpac says bank levy will cost it $260ma year

Westpac says bank levy will cost it $260ma year

The federal budget's new bank levy will cost Westpac about $370 million a year. Westpac posted record first-half cash profit of A$4 billion on May 8. "No company can simply "absorb" a new tax, so consideration is being given to how we will manage this significant impost".

CBA said it had expressed serious concerns that the levy was a poorly designed policy which would impact not just the banks, but its customers and shareholders.

In question time, the Turnbull government confirmed the bank levy would be a tax-deductible expense for the big five banks affected by it, and that the estimated $6.2 billion revenue to be raised was a net figure. The banks have opposed the idea. The two are the first of Australia's largest lenders to give an estimate of the impact of the levy, which the government forecasts will raise A$6.2 billion over the next four years.

In a letter to shareholders, Westpac said it was calling on the government to expand the tax to foreign banks to ensure it isn't "competitively disadvantaged", and to introduce a sunset clause so the tax stops at the end of the current budget cycle in 2021.

Westpac has strongly objected to the Levy on the grounds that it is an inefficient tax that targets just five companies; it places the major Banks at a competitive disadvantage relative to global peers; and it is a tax on growth because as lending and investment increases the cost of the Levy also rises. You know, I know and the government knows that a tax can not be "absorbed".

According to the bank's preliminary estimates, the levy would affect around $615 billion of its liabilities, and will negatively impact its 2017 full year results (for the year ended 30 September 2017).

With the legislation yet to pass the parliament, Mr Maxsted said the bank would be pushing for foreign banks to also be included.

But it is unlikely to withdraw support for the law if the inquiry is not extended to the foreign banks.

Labor has already said it will back the new tax, but it has supported calls for a looming Senate inquiry to look at extending it to big foreign banks trading in Australia.

Worldwide rivals would not be subject to the levy, although HSBC is subject to the equivalent United Kingdom scheme.

Westpac issued a statement saying the tax, if passed on the shareholders, will cost about 8c per share.

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