The Business Council of Australia welcomes the opportunity to provide a submission to the Senate Inquiry into the Major Bank Levy Bill 2017. Further scrutiny of the Bill is welcome given the number of uncertainties around the levy’s impact and implementation, compounded by poor policy process to date.
While we understand the difficult position the government is in and the need for budget repair, there is no substitute for a credible strategy to contain growth in government spending. The haste with which the levy has been introduced has left all stakeholders – government, companies and the community – with a great deal of uncertainty around the consequences of the levy’s introduction. It also sets a poor precedent for future development of public policy.
Businesses are also concerned that there is a real prospect that this ‘one-off’ revenue raising measure could become the norm now that the genie is out of the bottle. The tax system should not be changed through ad hoc measures designed to be a quick fix to the budget problem. Higher taxes are not budget savings and will only dampen growth and incomes over time.
In its scrutiny of the Bill we would encourage the Committee to satisfy itself that: the Bill has been subject to proper assessment (including of the regulation impact statement); the rationale of the Bill is both clear and consistent (for example, if it is for budget repair there should be a sunset clause); and the potential impact of the threshold over time be explored.
1. The levy should be introduced with a sunset clause so that it expires when the budget returns to surplus. It should not be used as an ongoing revenue raising measure.
2. There should be a legislated fully independent and transparent review of the levy after 3 years. The review should be brought forward in the event of an economic shock or major developments in the banking sector.