Will Australia's Bank Levy Become a Cookie Jar?: QuickTake Q&A

Australia’s mega-banks are seething after the government surprised them by imposing a new levy in the May budget. They’re also furious after only learning about the tax through media reports. Public sympathy is in short supply, though. The banks have faced criticism for failing to give borrowers the full benefit of interest rate cuts and for offering poor financial advice, while at the same time reaping record profits. They view the tax as a “serious attack” on their commercial activities and worry that the levy may become a “cookie jar” for this and future governments to plunder.

Put simply, the government needs the cash and the banking industry is unpopular with voters. The money raised will plug a gap in the country’s budget, allow increased spending on infrastructure and schools and boost the prospects of realizing a projected surplus by 2021.