The mini budget announcements have been drip fed to us over the last two days. One that has caused a bit of a reaction is the “deposit tax” whereby banks will be taxed 0.05% for deposits up to $250k. This will create a Financial Stability Fund for the government so when my bank goes bust, the Government will ‘repay’ my investments to me. Other countries have this in place, but it’s new for Australia.
So am I happy about the Government (or bank) taxing me for being a good saver? Well to be honest I don’t know. On one hand, I could look at it as a type of insurance. If I had $35,000 in savings, the deposit tax will be $17.50 — about the price of a nice lunch. But on the other hand, everyone is encouraging people to reduce debt and save for retirement. And the reward for saving is that we’re being penalised for giving our money to the bank.
So I am still undecided on the ‘bank tax’ but very grateful I am no longer a smoker because the new tobacco tax is worse! Their tax will increase by 12.5% per year for the next four years, increasing the cost of a packet of cigarettes by $5. Now that’s painful