Tax on Bank Deposits

[waterbottle]

It should only hit the well off and retirees, so who is going to complain.

It will hit anyone with a deposit that is less than $250k i.e. every FHB who was saving 10% for that home or unit; or the young man/woman saving for a new car or holiday; or the parents who were trying to build savings for the child's future education.
Retirees and the well-off aren't the only people with less than $250k. In fact, I would guess that they are the minority as most will be playing the property or sharemarket game.

We'll just have to wait and see as to who will actual complain

 

[waterbottle]

That's not logical in the context of this discussion. By the time deposit insurance is required the equity of the bank in question (and those who own the equity) will be toast. The depositor is being protected in the event the bank fails; the bank is not being protected in the even the bank fails.

WHAT?!

How in the world can you make this claim when as of 2008, we saw $US being pumped into failing bank - without regard for depositors - as they were 'too big to fail'!

Have you already forgotten? Are you so naive as to think that the government would use this fund to save depositors and NOT the bank? Did you think that when the LNP came out with the $20bn medical research fund that it was going to be pumping all that money into science, too?

Please.

 

[sptrawler]

As for the overall concept of a tax on savings, we already have 3 in the context of the average person. A tax on earning the money in the first place. A tax on interest earned. And the big one, inflation, effectively an annual tax on the entire balance of the account.

Wait until you're retired, and have nobody putting money in your bank every fortnight.

Then you really get an appreciation, for the erosion effect, when you are constantly drawing on the interest and capital.

 

[McLovin]

WHAT?!

How in the world can you make this claim when as of 2008, we saw $US being pumped into failing bank - without regard for depositors - as they were 'too big to fail'!

So the bank was saved (along with depositors money) but it was done "without regard for depositors". Do you have the faintest idea what you're talking about? Better yet, find me a single FDIC insured bank where depositors lost one cent.

 

[sptrawler]

It will hit anyone with a deposit that is less than $250k i.e. every FHB who was saving 10% for that home or unit; or the young man/woman saving for a new car or holiday; or the parents who were trying to build savings for the child's future education.
Retirees and the well-off aren't the only people with less than $250k. In fact, I would guess that they are the minority as most will be playing the property or sharemarket game.

We'll just have to wait and see as to who will actual complain

Yes but the first home buyer, or anyone working can mitigate the cost, by waiting a little longer.

Those who rely on the earnings, to live on, will have to further erode their capital to survive.:1zhelp:

 

[waterbottle]

So the bank was saved (along with depositors money) but it was done "without regard for depositors". Do you have the faintest idea what you're talking about? Better yet, find me a single FDIC insured bank where depositors lost one cent.

You are right, depositors didn't lose a cent.

My point was, that banks were saved and were allowed to continue operating. Depositors weren't saved because the government decided to insure them - they were saved because they had no option but to save the banks. Hence, the banks should be responsible for paying any charge for a fund that will be used to rescue them in the future.

 

[Smurf1976]

My point was, that banks were saved and were allowed to continue operating. Depositors weren't saved because the government decided to insure them - they were saved because they had no option but to save the banks.

It seems fairly clear that if an Australian bank gets into trouble then our taxes will be used to bail it out. It may not be written anywhere, but it's almost certain in practice.

Same goes for a few other things. "Too Big To Fail" is just another way of saying "taxpayer guaranteed" in practice.

 

[DaveDaGr8]

So here's a scenario. My wage into bank account A, i lose 0.5%. I then transfer it to my trading account, i lose another 0.5%, because i have now deposited it into another account. I transfer it again to my offset account, i lose another 0.5%, market conditions change i transfer it back and lose another 0.5%. Same money but it has the potential to be taxed multiple times and out of existance.

"Moving Money tax" doesn't sound very good, so they've called it a Deposit tax.

Take this a step further. As a trader constantly buying and selling, every time i make a buy/sell i will lose 0.5% of the total capital for that trade, because once i sell i will get $x deposited into my bank account. Do that 100 times and the numbers are really against you.

Is this how this system is supposed to work ?

They forget that they introduced this to stop people panicking and pulling money out of the system.

 

[McLovin]

Depositors weren't saved because the government decided to insure them - they were saved because they had no option but to save the banks. Hence, the banks should be responsible for paying any charge for a fund that will be used to rescue them in the future.

The government doesn't choose to insure them, FDIC receives a premium from the bank for insuring its account holders. Since 2007, 460 FDIC insured banks have failed and depositors have received their money back in every instance, but the banks have been sent to the graveyard. If an Australian bank were to fail it's very likely the bank would be nationalised (either wholly or partly depending on the extent of the damage) for a period of time -- like the UK did with Lloyds TSB. That would completely wipe out, or close enough to it, shareholders (as it should) but leave the "bank" operating as a government entity until it can be resold. At that point the bank is being run almost as a mutual for deposit holders. So yes, maybe the shell of the bank is saved, but for all intents and purposes the bank has failed and those with an equity interest in it are toast. They're certainly not insured from loss.

 

[McLovin]

So here's a scenario. My wage into bank account A, i lose 0.5%. I then transfer it to my trading account, i lose another 0.5%, because i have now deposited it into another account. I transfer it again to my offset account, i lose another 0.5%, market conditions change i transfer it back and lose another 0.5%. Same money but it has the potential to be taxed multiple times and out of existance.

Presumably it would be calculated in a similar way to interest. Eg calculated daily based on account balance and charged monthly.

 

[sptrawler]

So here's a scenario. My wage into bank account A, i lose 0.5%. I then transfer it to my trading account, i lose another 0.5%, because i have now deposited it into another account. I transfer it again to my offset account, i lose another 0.5%, market conditions change i transfer it back and lose another 0.5%. Same money but it has the potential to be taxed multiple times and out of existance.

"Moving Money tax" doesn't sound very good, so they've called it a Deposit tax.

Take this a step further. As a trader constantly buying and selling, every time i make a buy/sell i will lose 0.5% of the total capital for that trade, because once i sell i will get $x deposited into my bank account. Do that 100 times and the numbers are really against you.

Is this how this system is supposed to work ?

They forget that they introduced this to stop people panicking and pulling money out of the system.

Your forgetting one thing, they are trying to fund YOUR welfare system.
Your wage, transferred to your trading account, then transferred to your trading account, then transferred to your offset account.

Yep, they're going to tax it to pay for your welfare system, and why not?

Where the hell do you think they get the money to pay for it?

Maybe the magic wand, Rudd ran the batteries flat on that.

 

[DaveDaGr8]

Presumably it would be calculated in a similar way to interest. Eg calculated daily based on account balance and charged monthly.

So it's an ongoing charge ? I thought it was just a lump sum when deposited

 

[McLovin]

So it's an ongoing charge ?

Yes.

 

[Bill M]

Why is a tax on savers, unbelievable? They are the only ones who have any money.

I'm not saying it is right, but no one wants to tighten up on those who spend everything, so that only leaves the savers.

All the chardonnay leftie savers say," don't tighten up on welfare, education and health spending".
Where do they think the money will come from?

Do you think it will come from business, when we have a high corporate tax rate, and will cause further job losses?

Do you think it will come from wage earners, which will pass it on with wage demands?

Or do you think it will come those who are sitting on money in the bank, or those that are retired and can't make wage demands?

It isn't rocket science.lol

Yep you are right it's got to come from somewhere but not from me.

I have decided to spend all my money, live it up and blow the lot so I have no money anywhere.

Then at 65 my wife and I will get a free full government pension with free medical card.
Then I won't be paying tax on any bank accounts.
I won't need to worry about lump sums on Super as I won't have any.
I will be able to travel for $2.50 a day within a 300 km radius of Sydney.
When my Chemist bill gets to $344 p/a everything else after that will be free.
I will get half price licenses and utility bills.
I won't have to pay a Refundable Accommodation Deposit of up to 550K for entry into an Aged Care Facility. (Govt. pays that for people with no money)

Yep, I'll blow my money, take cruises, eat in the best restaurants, travel all over the world and then get everything for free. Way to go..............

 

[galumay]

So lets tax the savers and retirees, but continue to let the multi nationals rape and pillage the country at will, paying almost no tax. Thats a good idea.

 

[Bill M]

So lets tax the savers and retirees, but continue to let the multi nationals rape and pillage the country at will, paying almost no tax. Thats a good idea.

And this is why we have a shortfall. These are the people they should be after.

---
Treasurer Joe Hockey has broken a pledge to impose tough new tax avoidance rules on multinational companies that shift billions of dollars in profits between Australia and their international subsidiaries.

The practice of global corporations loading up subsidiaries with debt and then claiming relief from the Australian tax man on the interest paid gives an "unfair competitive advantage" over local rivals, Treasury said in 2013.

http://www.smh.com.au/federal-politics/political-news/hockey-backflips-on-tax-laws-to-target-multinational-profit-shifters-20141216-128ebg.html
---

 

[sptrawler]

Yep you are right it's got to come from somewhere but not from me.

I have decided to spend all my money, live it up and blow the lot so I have no money anywhere.

Then at 65 my wife and I will get a free full government pension with free medical card.
Then I won't be paying tax on any bank accounts.
I won't need to worry about lump sums on Super as I won't have any.
I will be able to travel for $2.50 a day within a 300 km radius of Sydney.
When my Chemist bill gets to $344 p/a everything else after that will be free.
I will get half price licenses and utility bills.
I won't have to pay a Refundable Accommodation Deposit of up to 550K for entry into an Aged Care Facility. (Govt. pays that for people with no money)

Yep, I'll blow my money, take cruises, eat in the best restaurants, travel all over the world and then get everything for free. Way to go..............

The wife and I have decided exactly the same, we won't be going stupid spending.
But we won't be watching the pennies, as we currently do.

 

[sptrawler]

So lets tax the savers and retirees, but continue to let the multi nationals rape and pillage the country at will, paying almost no tax. Thats a good idea.

Who is the easiest to hit? Complex multinational companies with teams of lawyers and accountants or peoples savings.

 

[galumay]

Who is the easiest to hit? Complex multinational companies with teams of lawyers and accountants or peoples savings.

You are dead right, but which one of those votes!?

(given that both major parties have both proposed the same double tax thats probably irrelevant. )

 

[banco]

The wife and I have decided exactly the same, we won't be going stupid spending.
But we won't be watching the pennies, as we currently do.

Well political risk can go both ways. There's nothing to guarantee the Government won't be forced to sharply cut back on the many welfare benefits that it offers to over 65s.