South Australians can breathe a sigh of relief today after the State Government declared its bank tax ‘dead’. If any state economy needs lower taxes, less red tape and a more competitive free enterprise environment, it’s South Australia.
Well done to the Liberal Party, Australian Conservatives and Advance SA MPs for standing up for SA at a time when this state desperately needs champions.
The government’s new tax was a tax on every South Australian, not just the banks.
If you have a home loan, this tax would have affected you.
If you own a business, this tax would have affected you.
That’s because governments can’t impose taxes for free. Labor said the bank tax would raise $370 million. And that money has to come from somewhere. There’s no such thing as a business ‘absorbing’ costs. Someone always pays. Most likely the costs would have been passed onto consumers. If you’re a bank customer that means you.
But even if the banks chose not to increase fees someone else has to pay. The banks could have cut wages for their employees instead. But that’s difficult too.
Banks operate in a competitive labour market, and they’re constantly trying to attract talent from elsewhere in Australia and overseas.
The only other option they have is to reduce dividends to shareholders. And guess what? Because of compulsory superannuation it’s likely you own Australian bank shares via your super fund.
This is why the best way for governments to raise revenue is to grow the economy. A growing economy means more jobs, higher incomes, and more money in the government’s coffers. When it comes to taxes, there ain’t no such thing as a free lunch.
Instead of raising taxes, the government should be doing everything it can to cut taxes and cut red tape.
