Aus­tralia slaps ma­jor banks with higher taxes

New Straits Times - - Business -

CAN­BERRA: The Aus­tralian govern­ment pledged to de­liver a small bud­get sur­plus in 2020/2021, slap­ping big banks with new taxes to end more than a decade of deficits that have threat­ened its prized triple-A credit rat­ing.

The Lib­eral Party-led coali­tion con­ser­va­tive govern­ment also promised to fast-track ma­jor rail and road projects and de­liv­ered sweet­en­ers for home buy­ers in an over­heated prop­erty mar­ket in its an­nual bud­get yes­ter­day.

Trea­surer Scott Mor­ri­son said the coun­try’s prof­itable banks, which had been un­der fire in re­cent months amid a se­ries of misconduct scan­dals, would bear the brunt of a bud­get “re-set” as he aban­doned “zom­bie sav­ings”.

Those sav­ings, in­clud­ing wel­fare re­forms, had ar­ti­fi­cially re­duced the red ink in the bud­get af­ter they were blocked by op­po­si­tion law­mak­ers in a hos­tile Se­nate where the govern­ment has a wafer-thin ma­jor­ity.

The back­flip re­sulted in a A$29.4 bil­lion (RM94 bil­lion) deficit for 2017/2018 than the A$28.7 bil­lion fore­cast in De­cem­ber. But the bud­get fore­cast a A$7.4 bil­lion sur­plus in 2020/2021, an im­prove­ment on A$1.08 bil­lion at the mid-year re­view.

Aus­tralia’s A$1.7 tril­lion econ­omy has out­per­formed many of its peers since the global fi­nan­cial cri­sis, but it has strug­gled to man­age the end of a mining in­vest­ment boom that un­der­pinned much of its wealth.

“We must live within our means and this is an hon­est bud­get,” said Mor­ri­son, adding that a new six-ba­sis point levy on big banks’ li­a­bil­i­ties, to kick in on July 1, would raise A$6.2 bil­lion over the next four years.

Mor­ri­son de­scribed the measure, along with a A$8.2 bil­lion in­come tax in­crease on work­ers, as “a Se­nate tax” to get the bud­get back into balance as de­manded by ratings agen­cies or risk los­ing its triple-A credit rat­ing.

Marie Diron, as­so­ciate manag­ing direc­tor of Moody’s In­vestors Ser­vice, said it as­sessed Aus­tralia’s fis­cal strength as “very high, a key sup­port to the govern­ment’s triple-A rait­ing and sta­ble out­look” af­ter the bud­get. Reuters

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