COBA escalates its campaign against the deposit levy

The Customer Owned Banking Association has ramped up its campaign to persuade the Government not to go ahead with a deposit levy to fund the Financial Claims Scheme.

Arguing that the proposed levy is against the interests of savers, COBA's Save Your Savings campaign is supported by research showing that a majority of people (56 per cent) are not confident that they have enough savings to meet future needs.

COBA argues that savings are already heavily taxed relative to other investments and that savings rates are barely keeping pace with inflation.

The deposit levy was announced by the previous Government in a pre-election economic statement in August 2013. Labor's plan was to establish a Financial Stability Fund to meet any costs of the Financial Claims Scheme.

The fund would be supported by a 0.5 per cent tax on protected deposits.

The arrangement was scheduled to start in 2016. In the May Budget the Government left open the possibility that the levy would be implemented but did not commit itself one way or the other.

The Financial System Inquiry recommended against the levy, arguing that it was preferable to impose a levy if the Financial Claims Scheme was triggered and insufficient funds were recovered through liquidation of assets.

COBA chief executive Mark Degotardi said in a statement: "The Government's own tax review discussion paper points out that savings accounts are much more heavily taxed than property, shares and superannuation."