Do the Banks Need a Great Big New Tax?


The extraordinary profits of Australian banks have, once again, ignited the debate on how to control them.

You could argue, as the banks do, that these are large companies and you expect large profits. The Australian Bankers Association say the total asset base of the big four banks required to earn these profits is $1,170 billion and the return on these assets is less than 1 percent.

Richard Denniss, Executive Director of The Austraia Institute, says that’s like valuing a car park based on the building and all the cars in it. They don’t own the cars and the banks don’t own our money. In the last half year the Commonwealth Bank made a $3.3 billion after-tax profit on $9.7 billion income –— that’s a 34 percent profit margin. Figures from APRA show this is in-line with profits across the big four banks for last year.

So, is a super-profits tax on banks the answer? What good would it do? We discuss the pros and cons in this edition of BTalk.

First published on CBS News

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