Dr. Claire Matthews: Banking expert on the public's negative views towards banks

There appears to be a feeling we don't like the fact that banks make money. 

Inland Revenue's digging into the tax settings being applied to banks at the Government's request - as it seeks to ensure they're paying their fair share.  

But Massey University banking expert Claire Matthews told Heather du Plessis-Allen she believes it's motivated by a general bad attitude towards banks.  

She claims the Government's looking to take more money off them, as they're perceived as big organizations that make a lot of money. 

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Episode Transcript

Speaker 1 (00:00):
So the government is considering seeking advice from Inland Revenue
around the tax settings for our major banks. Finance Minister
Nikola Willis wants advice ahead of next year's budget on
where the banks are paying their fair share. Doctor Claire
Matthews is a massive university banking expert and with us
right now. Claire, Hello, Mariana Heather. Is there any doubt
that banks are paying their fair share?

Speaker 2 (00:20):
I don't think there is, although some people possibly will
have that doubt. The evidence is that for some time
now they have been paying the amount of tax that
you expect them to pay. They're paying it about the
corporate you know, when you look at the eral amount
of tax are paying, they're paying a percentage that aligns
with the corporate tax, right, which is what they should
be paying.

Speaker 1 (00:39):
Yeah, So what do you think is motivating this?

Speaker 2 (00:41):
Then? The general attitude towards banks. We don't like the
facts for some reason, that they make money, that they're
a big organization, and therefore that money is a lot
of money, and therefore the government looks at trying to
take more off of So.

Speaker 1 (00:55):
Just a case of turning them into a whipping boyli
like the supermarkets.

Speaker 2 (00:58):
Perhaps I don't think it's turning them into They've been
a whipping boy for at least as long as a supermarket,
So absolutely, that's what it's about.

Speaker 1 (01:07):
Yeah, I mean, is it possible that there is an
ulterior motive here clar if you believe the rumors that
are coming out of Wellington. There seems to be some
consideration of perhaps dropping the corporate tax rate. If you
drop the corporate tax rate, but then you pop another
tax on top of the banks, you may be able
to keep them paying what they're paying while everybody else
pays less. What are the chances?

Speaker 2 (01:26):
Oh? Absolutely, They pay a very large portion of something
like twenty percent of total tax quite total corporate tax
in New Zealand, so they're paying a huge amount of tax.
So if you drop the corporate tax rate but keep
the banks tax at a higher level, the government could
manage to avoid the excellent impact on their text tape.

Speaker 1 (01:45):
Yeah, exactly. You might be able to do that with
something like a major bank lever or something like that. Yeah, yeah, absolutely, Yeah,
And what do you reckon, Like, what level do you
set a major bank lever at?

Speaker 2 (01:57):
Well, I guess you said it at whatever you need
to to maintain your text tech all to increase your
text tape.

Speaker 1 (02:03):
It's reasonable, though, I mean, let's let what do you
think that the government may think is reasonable? Set aside
what you or I may think. Are we talking three
percent four percent?

Speaker 2 (02:16):
It's really hard to know. Yes, if they were to
drop let's say they were to drop the top corporate
text rates from twenty out to twenty five, then they
might say that they would lead them the banks at
three percent, an extra three percent so that they would
say at the same level so they're not disadvantage further
from what they are currently and potentially that would mean
that the impact for the bank, for the government would

(02:37):
be minimized.

Speaker 1 (02:39):
It's good to talk to you always as thank you
for your time, Doctor Clare Matthew's banking expert at Massive University.
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