Banking industry welcomes deposit tax decision

The abandoned tax, which was proposed by the former Labor government, was designed to protect depositors in the event that an Australian bank collapsed, and would have raised approximately $1.5 billion over the next four years.

CBA chief executive Ian Narev said the said the government’s decision to abolish the tax strikes the right balance between maintaining confidence and supporting economic growth.

“The Australian banking system is strong and resilient without the need to impose additional costs on savers and investors,” he said.

“We congratulate the government for its constructive consultation on this important policy decision, as demonstrated throughout the FSI [Financial System Inquiry] process.”

Mark Degotardi, CEO of the Customer Owned Banking Association, said the policy decision is “pro-consumer and pro-competition”.

“This outcome is exactly what the FSI intended in its blueprint to make our financial system stronger, without anti-competitive distortions,” he said.

“Australian savers now no longer have to worry about an additional burden at a time of low returns on their savings due to record-low interest rates.”

Tony Pearson, executive director of industry policy at the Australian Banker’s Association (ABA) agreed that the scrapping of the deposit tax is a wise policy decision and a welcome end to the uncertainty for savers.

“Millions of Australians who rely on their savings for current and future income would have been hurt by this tax, including many self-funded retirees,” he said.

“The ABA is pleased that the government has moved to protect mum and dad savers and retirees from this unnecessary tax.”