In the South Australian state budget 2017-18, South Australian Treasurer Tom Koutsantonis announced that the state government intended to introduce a South Australian Major Bank Levy, one of two revenue measures “to help us meet the cost of our significant support for driving economic growth and creating more jobs”.1 Treasurer Koutsantonis made clear that this levy was explicitly modelled on the Commonwealth government’s Major Bank Levy, which was announced in the May 2017-18 Commonwealth budget and passed the Commonwealth parliament in June.
This paper finds that the South Australian Major Bank Levy:
- will be economically harmful to a state that has seen a rise in unemployment and a decline in business investment,
- lacks serious justification in either taxation or banking policy,
- represents a rollback of the GST compact of 2000 which required South Australia to remove state taxes on banking and financial services,
- harms the stability of banking in South Australia and Australia more generally,
- increases ‘regime uncertainty’ for investors, and
- there are reasons to believe it has already done harm to the South Australian economy.
Not only should the bank levy be rejected by the South Australian parliament, but parliament needs to work to ensure that markets and investors have certainty that such an arbitrary and harmful intervention could not occur in South Australia in the future.