A second Australian
state on Friday said it was open to charging its own bank tax, raising fears
the federal government has opened a "Pandora's box" by slapping a
A$6.2
billion ($4.7 billion) levy on major lenders in its May budget.
A day after
South Australia state infuriated the banking sector by announcing a A$370
million tax on five big lenders, Western Australia said the option was
"attractive" and analysts warned investors to brace for more tax
hikes.
"I'm
not going to pretend for a moment that it is not an attractive option ... I
remain open to it," Ben Wyatt, treasurer of resources-rich Western
Australia, told the Australian Broadcasting Corp.
While a
state bank tax was not currently being considered, Western Australia was
watching how it went in South Australia, he said.
The federal
and South Australian taxes will apply to the so-called "big four"
banks - Australia and New Zealand Banking Group Ltd (ANZ.AX), Commonwealth Bank
of Australia (CBA.AX), National Australia Bank Ltd (NAB.AX) and Westpac Banking
Corp (WBC.AX), plus top investment bank Macquarie Group Ltd (MQG.AX).
Shares of
ANZ, Commonwealth Bank, National Australia Bank and Macquarie fell about 1
percent on Friday, in a flat overall market, while Westpac was also flat.
"Pandora's
Box is officially open," UBS said in a research note. "As suspected,
the recent announcement of the Federal Bank Levy has already led to higher
taxes on the banks."
Morgan
Stanley said in a note to clients: "The threat to bank profitability from
governments is emerging faster than expected."
Mark Nathan,
a partner at Arnhem Investment Management, which owns bank shares, told Reuters
the federal government under former investment banker Prime Minister Malcolm
Turnbull had "opened the door".
"But I
don't think anybody was expecting anybody else to run through that door,"
he said.
BANK-LASH
South
Australia's move puts more pressure on Turnbull who raised the ire of the
banking sector after he announced the federal government's levy with only brief
consultation in May.
That move
had broad popular support, with anti-bank sentiment running hot following a
series of misconduct scandals and years of record profits.
Still
reeling from that blow, the Australian Bankers Association (ABA) this week
accused South Australia of declaring war on the country's most profitable
businesses.
ABA Chief
Economist Tony Pearson urged other states to "think carefully about the
implications for business confidence and investment".
Westpac
subsidiary BankSA said plans to employ an additional 150 people in South
Australia were now on hold because of the tax. In response, the state's ruling
Labor Party said banks were already cutting jobs despite record profits.
Turnbull's
ability to push back against South Australia's levy on pro-business grounds was
limited by his own support for a far bigger bank tax and his treasurer's calls
for lenders to "pony up" to help rein in the budget deficit.
"When a
state imposes higher business taxes within its own jurisdiction, is that going
to drive investment, support, jobs within that state or is it in fact going to
make it less competitive?" he told reporters.
Canberra has
said its 0.06 percent tax is low by global standards, with Germany charging the
same amount for similar-sized lenders and Britain charging 0.09 percent.
The
governments of the three biggest states - New South Wales, Victoria and
Queensland - said they had no plans for a bank tax.
REUTERS*
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