Banks label tax as ‘inappropriate’
(4 March 2010 – Australia) The Australian Bankers’ Association chief executive, David Bell, has said the government’s idea of a tax on banks is ‘inappropriate’ given the out-performance of local lenders versus their global counterparts.
In a speech earlier this week at a business conference in Melbourne, the Reserve Bank’s governor, Glenn Stevens, said that a risk levy on the major banks would be one way to stop them from ‘socialising losses’ in crises, improving stability of the global financial system.
Mr Stevens added that a leverage ratio, which would require banks to set aside more funds, would not damage Australian banks if it was calibrated sensibly.
Mr Bell dismissed the idea, telling the Australian Financial Review, that the proposal was made to address circumstances in which banks had failed and had to be bailed out by taxpayers in countries like Britain and the US.
This is not relevant to Australia because no bank has failed during the global financial crisis, and no taxpayers’ funds have been used to assist banks, Mr Bell highlighted.
Mr Stevens added that a leverage ratio, which would require banks to set aside more funds, would not damage Australian banks if it was calibrated sensibly.
Mr Bell dismissed the idea, telling the Australian Financial Review, that the proposal was made to address circumstances in which banks had failed and had to be bailed out by taxpayers in countries like Britain and the US.
This is not relevant to Australia because no bank has failed during the global financial crisis, and no taxpayers’ funds have been used to assist banks, Mr Bell highlighted.
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