Banks slam tax levy as ‘inappropriate’

Staff Reporter Wednesday, 3 Mar 2010 1 minute read

Australia’s banking industry has dismissed a proposal to impose a risk levy on Australian banks.

Earlier this week, Reserve Bank governor Glenn Stevens told a business conference in Melbourne that a risk levy on the major banks would be one way to stop them from ''socialising losses'' in crises, improving stability of global financial systems.

“It probably wouldn't hurt for there to be a little bit more capital and more attention to liquidity,” Mr Stevens told Australian Securities and Investments Commission's summer school.

“A leverage ratio, which would require banks to set aside more funds, would not damage Australian banks if it were calibrated sensibly.”

However, Australian Bankers’ Association chief executive David Bell dismissed the idea of a tax on banks as “inappropriate” given the out-performance of local lenders versus their global peers.

“The proposal was made to address circumstances that had failed to and had to be bailed out by taxpayers in countries like Britain and the US,” Mr Bell told The Australian Financial Review.

“This is not relevant to Australia because no bank has failed during the global financial crisis, and no tax payers funds have been used to assist banks.”