Fact sheet

Fact Check: Is the new bank levy similar to levies common right around the developed world, Europe in particular?

Publisher
Liberal Party of Australia Banks and banking Company tax
Description
On budget night 2017, the Federal Government announced a levy on Australia's big banks, which it estimated would raise $6.2 billion over four years. Prime Minister Malcolm Turnbull said such levies were "common right around the developed world." He added that many other countries had similar arrangements, particularly in Europe. Are levies of this kind common right around the developed world? And compared with other bank levies, is Australia's similar? Mr Turnbull's claim is exaggerated. After the Global Financial Crisis, many European countries introduced bank levies, but other parts of "the developed world" did not follow their example. Australia's levy is similar in its structure and rate to some European levies but different from most of them in its primary aim. Due to the impact of the GFC on the European banking system, a dominant theme of the European levies is creating greater stability in the banking sector by reducing debt and discouraging risky lending practices. Many governments specify that the revenue raised is to be used to pay back GFC bailout loans, and some put the revenue into dedicated funds to be used as a buffer should another crisis occur. In contrast, Australia's levy is designed primarily to raise revenue for budget repair, as well as helping create greater industry competition and balance sheet resilience.
Verdict: Exaggerated
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