Saturday, July 24, 2010

'Super Tax on banks? No thanks

There are some days it would be handy to know who the people are that make up the criteria for opinion polls and survey's.

You'd think having spent my entire career in finance, I'd be just the sort of person they're after for any marketing survey or opinion poll when it comes to Australia's finance sector.

However, as it turns out, working in finance disqualifies me - either that or the companies conducting the polls are regular readers of Money Morning.

So you can imagine my surprise - and I'm sure you'll be surprised too - when the latest survey revealed that nearly two thirds of Australians want a 'super tax' introduced to our banking sector.

Even the executive director of the company that conducted that poll was surprised. 'It was a concern Australians would accept higher taxes,' said John Roskam of Institute of Public Affairs. Oddly enough, the company is very firmly against any form of 'super profits' being applied to any industry.

What could make these 60% or so of Australians want a bigger tax imposed on them? Supposedly, this survey has ' a lingering hostility towards banks and the huge salaries of some executives.' Not only that, but this survey shows that some Australians resent the banks raking in theses enormous profits and think the government should tax them more to teach those greedy banks a lesson.

But here's the thing. The banking industry will just pass their new increased costs onto the consumer, which is, er, you and me.

It's actually pretty straight forward.

In fact, in response to the article, pretty much all of the sixty odd bloggers were against anything like this being introduced. They all seemed to understand exactly how any sort of 'super tax' on banks would affect them.

And the banks wouldn't lose a cent. They'd make sure that anything that ate into their profit margin would just mean the cost of their products would increase. Like I said, it's pretty straight forward.

But it makes you wonder why this, presumably small, group believe that taxing a profitable enterprise is a solution. I mean, did they honestly believe the Rudd government's slogan that taxing the miners would create a 'fairer Australia'?

Why is taxing a profitable business the only way to keep Australians happy? And what makes these few think that more tax on any business would be better for us?

When the super profit tax was in its infancy, there was never a mention of reduction in personal income taxes. And not one politician suggested lowering the GST. The only 'bonus' was that business would pay 2% less tax per year. Chances are that your local 7-11 isn't about to pass on the new tax saving to their customers. No, it probably would have kept the extra 'profit' for them.

Or, that extra money from lower taxes might mean 7-11 can employ another person.

But this is the problem with taxing a business more because they make more money than 'normal' people. It's not a solution, and at the end of the day, just because the government might have more in its bank account, doesn't mean you get a say in how it's spent.

I mean, for example, how many millions of dollars has been wasted on Senator Conroy's internet filter? And so far not one single member of the Australian public has had a say in how their tax dollars are being spent on this project.

In fact Australians haven't even been consulted on this.

Or if you live in Victoria, over one billion dollars has been spent on the Myki debacle. And the transport ticketing system didn't even need 'fixing' or upgrading. But the state government believed that was an investment of your tax dollars and yet pretty much every commuter on public transport in Victoria would disagree.

And this is the biggest problem of allowing the government to tax you more.

If something like a 'super tax' was applied to the banks it's actually going to discourage you from spending any more money.

Think about it, if your personal banking costs get higher, it means that you have less money to spend on yourself. And we all know how important our spending is to the government! Or, all the extra costs of banking might now mean that you don't save as much.

The more money the government takes from you in the form of taxes, is, in the long term, only undermining your ability to choose how you want to spend or save your hard earned cash.

Taxing the banks won't stop them making less profit.

The only thing a 'super tax' on the banks will achieve is more money for the government to waste and less money in your pocket.

Shae Smith
Assistant Editor
Money Morning

Australia is in full swing of a short election campaign so the associated spin and bull dust will be intense, promises being made that will never be kept and a cash strapped government putting out feelers to see what they can get away with if elected.

Diversions will be many, voters need to be aware that anything shelved ( hidden from discussion ) previously will be back on the agenda once balances of power have been sorted out.

The cancerous ugly carbon tax is making headlines again and won't be sorted until the masses have given a resounding no to this attempt to divert huge wealth rescources to banksters, fraudsters, dictators, "movie stars" like Al (Waterfront) Gore, hot air merchants and financial manipulators.

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