New bank tax puts future investments in 'doubt' as investors admit less confidence in Australia

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An investor wipes his face as he stands in the Australian Securities Exchange in front of boards displaying stock prices in central Sydney October 16, 2014. Australian shares slid 1.1 percent on Thursday after U.S. stocks lost ground as investors continue
An investor wipes his face as he stands in the Australian Securities Exchange in front of boards displaying stock prices in central Sydney October 16, 2014. Reuters/David Gray

Australia's move to slap its major banks with a $6.2 billion tax has resulted to uncertainty among global investors who think that Australia is no longer a stable investment destination, the chief executive of National Australia Bank revealed. Investors reportedly admitted they now have less confidence in Australia as a place for investment.

Andrew Thornton, NAB chief executive, revealed that some investors have expressed concern about the federal government levy, the Australian Financial Review reports. He said they are now saying Australia is less stable and less consistent.

Australian Conservatives MP Dennis Hood has recommended the government to shelve the levy and take it to the state election in March for a mandate. He said the Australian Conservatives already met with senior representatives of some of the country’s largest banks and have been told the tax “puts substantial future investment in SA in doubt.”

Last week, South Australia announced a $370 million tax on five big lenders. The federal and South Australian taxes will apply to Commonwealth Bank of Australia (CBA.AX), National Australia Bank (NAB.AX), Australia and New Zealand Banking Group Ltd (ANZ.AX) and Westpac (WBC.AX). It is also expected to apply to top investment bank Macquarie Group (MQG.AX).

A second Australian state has stated it was open to charging its own bank tax. Western Australia said the option was "attractive.” Meanwhile, governments of New South Wales, Victoria and Queensland show no signs to follow suit.

Federal Treasurer Scott Morrison said SA has to explain the state tax, adding their measure by contrast is quite straightforward. “We're a national government, we're a government that operates federally and we're in position to put these measures in place," he said, according to Reuters.

Premier Jay Weatherill said the SA government would do all things needed in order to defend its new bank tax. He maintained that SA is determined to take charge of its own future and will not be dictated by any other large interests. Tom Koutsantonis, SA treasurer, argued the new tax would guarantee the “sector contributes its fair share.”

On Tuesday, the Australian Bankers’ Association released a new report that indicates that banks targeted for a new tax in South Australia are among the highest corporate taxpayers in Australia. ABA Executive Director Tony Pearson noted banks made the largest contribution by far to assist governments at public services like schools, hospitals and roads. There are also reports about a huge advertising campaign to contradict the measure.

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