Roundup: Aussie gov't urges big banks to absorb controversial tax hike despite industry unrest

Australia's Treasurer has urged the nation's big banks to absorb a new 6.2-billion-Aussie-dollar (4.56-billion-U.S.-dollar) levy despite a warning from the banks that the tax hike would be handed down to customers.

In one of the more controversial measures announced in the Australian federal budget on Tuesday, Australia's "big five" banks will be required to pay a 0.06 percent levy to the government in an effort to fix the budget deficit, but the industry is fuming and has warned the tax would trickle down to affect everyday Australian families.

Speaking to the press on Thursday, Treasurer Scott Morrison said the banks needed to "pony up" and take the "reasonable" hit, explaining that it would only be four years before the budget is back in surplus.

"This tax is staying. It's a fair and reasonable tax. Our banks pool 30 billion Aussie dollars in profits annually and this is 1.5 billion Aussie dollars in tax (per year for four years)," Morrison said.

"I think that's a very reasonable amount. I welcome the fact that, yesterday, the Commonwealth Bank and the ANZ Bank took a breath, and I think they issued a very measured statement. I think that's important."

"Today, officials from Treasury will meet with officials from the banks and work through the details and I think that's important to do in a sober and considered way, and I think I'd be very surprised if the banks were to take a different approach."

Morrison said the wider budget measures, which included the big bank levy and addition tax pressure on large multinationals, would put "downward pressure of the cost of living" for everyday Australians, saying it was "fair and reasonable" that the nation's largest profiteers contribute to "fixing the budget."

"It's very fair and reasonable thing to do to have a structural change to how we tax banks in this country to ensure they make an ongoing contribution to these goals," Morrison said.

"(This will be used) not only for budget repair, but for funding schools and funding public health."

It has also been revealed that the Treasurer's master plan to hit the banks with the 6.2 billion dollar levy came about after a visit to London in January, during which he was taught how British regulators implemented similar measures on their big banks.

While Morrison has cautioned the banks that their customers "already don't like them," telling them to "prove (the customers) wrong and pony up to help fix the budget," bankers have warned the government that it was likely that the levy will be passed onto customers.

Overnight, CEO of the Australian Bankers Association Anna Bligh said the banks were "very angry" with the government ahead of Thursday's meeting with Treasury.

"Right now, the major banks of Australia are very angry. They feel they have had a tax imposed on them uniquely that does not apply to any other part of the business community," she said in a statement overnight.

Chairman of the Westpac Banking Corporation Lindsay Maxsted said there was "no justification for (the tax), other than that the budget has been mismanaged and we have the capacity to pay," while Commonwealth Bank CEO Ian Narev said "there is no such thing as a cost being absorbed" and explained that the tax would trickle to affect hundreds of thousands of Australian families­ who own shares in the blue-chip company.

Meanwhile Financial System Inquiry David Murray told News Corp that the tax didn't make much sense.

"If (the levy) is not passed on (to customers), you're stripping capital out of the banks when they have to be unquestionably strong," Murray said. (1 Aussie dollar = 0.73 U.S. dollar) Endit