Super profits tax for the banks

Vanguard April 2013 p. 7
Jim H.

(Above: profits for the Big Four for the first half of 2011)

The Greens’ call for a super profits tax on the big banks is welcome.

The Communist Party of Australia (Marxist-Leninist) is in complete accord.

Labor Treasurer Wayne Swan might have dismissed a super profits tax on banks outright. Many Australians have not. There is a loud call to take on the banks. Failure to do so is not putting Labor in a good light. They are seen to be in the pocket of the big end of town.

 

Rather than taking on the banks, they have been given a helping hand.  The Reserve Bank will supply the banks with a permanent bailout facility worth up to $380 billion by 2015. This amounts to providing a taxpayer backed new line of credit as well as protection from insolvency. Not only will this not solve any existing problems. It is counterproductive.

The trouble is that bank operations remain essentially unregulated. A shortcoming made much worse when the banks largely misuse the funds under their control and often involve themselves in speculative ventures.  

It is right to insist that as a minimum, they pay  a super profits tax in exchange for the protection they have been given.

In the end, even this is not enough. To make a significant difference much more regulation is needed. Nationalisation of the banks would go much further. Since Labor, having fully embraced neoliberalism, will not pursue bank nationalisation, a bank super profits tax is the only likely demand that could be achieved under the capitalist institution of parliament.

The Green’s proposal involves a 0.2% levy on all banks with assets above $100 billion net. Party deputy leader Adam Bandt said that the proposal, costed by the Parliamentary Budget Office, “would raise over $11 billion over four years.”

This would certainly target the big four banks that own collective assets of above $100 billion and recorded a profit of $24 billion last year alone.

 

There is no reason why the proposal should not involve a number of large directly foreign owned trading and savings banks. Citibank is a good example of an overseas bank operating on the Australian scene.

A principal justification provided for the tax is that the big banks have a monopoly advantage over their rivals in that they can obtain cash from the global wholesale money market at a cheaper rate. This is true. There are other good reasons. High on the list is that the banks have been manipulating the economic crisis to their own advantage and fleecing the Australian people at every opportunity. An estimated $21 billion has been skimmed off from home loans since 2010.

The banks have not been using the wealth in their hands to build up the manufacturing base of the country. They have done nothing to alleviate the growing hardship faced by many.

Former Reserve Bank governor, Bernie Fraser, has spoken out and said while the banks claim that charges and interest have to be raised to cover a rising cost of borrowing, these costs have actually gone down – for them at least.

To top it off, decisive foreign ownership has meant that a large portion of net profits are siphoned off overseas. In short they have not acted in the interests of Australia’s future and of the vast majority of those who live here.

Taking on the banks is a vitally important issue. Capitalism cannot provide a sound banking system capable of building a sustainable economy and society, serving the vast majority of Australians.

We do not need a rogue banking system that is part of the problem and not part of the solution. Imposing control over the robber barons is to exercise justice.

This is what the Australian people want.

A super profits tax on the banks is a good start.