If the company tax rate were 25 per cent today it would represent a ‘gift’ of $2,219 million to the big four banks or $660 million for the Commonwealth Bank alone. However, the government plans to phase in the tax cuts over a number of years.
If the government’s plan were fully implemented then by 2026-27 the gift to the big four banks would be a massive $3,500 million with the Commonwealth Bank receiving a tax cut of $1,000 million. Over the ten years to 2026-27 when the total benefit to companies is estimated at $65 billion, our estimates suggest the big four banks will receive a ‘gift’ of $9,500 million with Commonwealth Bank alone to receive $2,800 million. These banks hardly need any assistance when their pre-tax profit is over $43 billion and after-tax profit is still very large at over $30 billion. Indeed, based on a survey by The Banker, a London based industry journal, the profits of Australia’s big four banks are the most profitable in the world relative to the size of their home country. Australia’s top four banks were 2.9 per cent of Australia’s GDP.