Taxation changes should be judged
on their merits – not packaged

Sydney, 25 May 2010: The Australian Bankers’ Association (ABA) says it is disappointed that the Federal Coalition is opposing the reduction in interest withholding tax and the tax break on deposits announced in the Budget.

Steven Münchenberg, Chief Executive of the ABA, said: “Reducing interest withholding tax (IWT) could enable banks in Australia to raise more deposits overseas for lending within Australia. Local subsidiaries and branches of foreign financial institutions will be able to access funding offshore from their parents.”

“Also, banks in Australia can't source all of the funding that is required for investment domestically, so it makes sense to make Australia more attractive to offshore capital. This reduction in IWT will enable banks in Australia to compete more effectively in capital markets.”

“The tax break on deposits provides a new incentive for Australians to save and reduces a tax-based distortion between different classes of investments. By encouraging more savings in deposits, it will improve the rate of national saving, in particular, middle and lower-income household saving, which is a concern for retirement incomes.”

“These taxation initiatives should be considered in their own right and not be packaged with other Budget measures.”

“The banking sector expects the Australian Government to take a strategic and coordinated approach towards further developing Australia as an international Financial Services Centre. These tax changes were a good first step in that direction, and that’s why opposing the changes is short-sighted.”

 
For further information: 

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS