The budget delivered last night will see Australians paying higher tax through an increase in the Medicare levy to plug the gap in the National Disability Insurance Scheme (NDIS).
And the big four banks and Macquarie will be hit with a new levy of six basis points on liabilities, applying to senior bonds, covered bonds, subordinated bonds and all deposits over the $250,000 in protected deposits per individual.
That will raise $6.2 billion over the next four years to repair the Budget.
In addition to that, banking executives breaching misconduct laws will face penalties ranging from $50 million for small banks and $200 million for larger banks.
The government will also establish a new Australian Financial Complaints Authority to administer a “banking executive accountability” regime. This will be administered by the Australian Securities and Investments Commissions costing $4.3 million. There will also be a permanent Australian Competition and Consumer Commission team to investigate competition in the banking and finance system.
The prudential regulator will also get the power to set the long-term remuneration of senior bankers.
“For the system to be fairer there needs to be greater competition and accountability — now,” Treasurer Scott Morrison said.
Australian Bankers’ Association Chief Executive Anna Bligh said the bank tax was actually a tax on the economy.
“This new tax is a direct attack on jobs and growth, not just a tax on the five largest banks,” Ms Bligh said.
“It is a tax that will hit Australians by hurting investment and could have unintended consequences. Contrary to the Government’s claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system.
“This new tax is not a well thought out policy response to a public interest issue, it is a political tax grab to cover a budget black hole. It is naïve and misguided and has already sent the wrong signals to global financial markets about the strength and stability of our banking sector.”
While the budget gets rid of the Medicare rebate freeze which was widely condemned by doctors, the Medicare levy will increase by 0.5 per cent from 2019.
This means just about all Australians will have a bigger tax bill. Those on a taxable annual income of $85,000 will pay an extra $425 a year.
The bulk of the money will go towards ensuring the $22 billion NDIS will be fully funded, potentially ending the political battle over the scheme’s future.
“Even if we are not impacted directly, this is all our responsibility,” Mr Morrison said.
“Our decision to increase the levy reflects the fact that all Australians have a role to play.”
And in another tax slug, employers will pay an annual levy $1800 per worker per year on temporary work visas and a $5000 one-off levy for those on a permanent skilled visa.