Families and small business owners will be hit with $1 billion a year in higher interest rates and charges when banks pass through the cost of the Coalition's paid parental leave tax – as the Opposition Leader himself has encouraged them to do.
New Treasury analysis shows the cost of the 1.5 per cent company tax hike on banks and other mortgage lenders is nearly $4 billion over four years – reaching $1.1 billion in 2016-17.
The banking industry has confirmed these costs will be recouped through higher interest rates. Mr Abbott previously said businesses would pass on the cost of his tax to consumers:
"Well, obviously businesses do pass on costs and if there was a levy that was to fund something, yes that would be a cost."
[RADIO 5AA – 26 APRIL 2013]
His Shadow Treasurer Mr Hockey has also said:
"Any additional taxes you put on the banks, they'll just pass straight through to consumers."
[DOORSTOP - 12 AUGUST 2010]
Mr Abbott's new tax will send standard variable mortgage rates up by 10 basis points, while business rates could rise by as much as 25 basis points.
Mr Abbott's unfair and unaffordable PPL scheme will be paid for out of the pockets of hardworking families and small businesses across Australia.
The big banks have put Mr Abbott on notice that they will pass on every dollar of his company tax hike by jacking up interest rates on mortgages and small business loans - everyone with a home loan or business loan will pay for Mr Abbott's PPL scheme.
It's downright unfair to rip away $2,000 from new families on modest incomes and jack up their mortgage repayments just to put $75,000 straight into the bank accounts of millionaires.
Under Labor, a family on a $300,000 mortgage is saving around $5,500 a year in repayments compared to the high interest rates the Liberals saddled them with when they left office.
Cost of 1.5 per cent company tax hike on entities involved in general lending and deposit taking ($m)
| 2013-14 | 2014-15 | 2015-16 | 2016-17 | Total |
|---|---|---|---|---|
| 850 | 970 | 1030 | 1110 | 3960 |
Banking, Building Society Operations, Credit Union Operation, Other Depository Financial Intermediation, Non-Depository Financing Institutions. Assumes no imputation credits provided to shareholders.