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Financials

Australia's opposition Labor vows new bank tax ahead of election

SYDNEY, Feb 25 (Reuters) - Australia’s Labor opposition party will introduce a A$640 million ($457 million) tax on the country’s largest banks if it wins a national election due by May, a further headwind to a sector recovering from multiple scandals.

The proposed charge would be in addition to a new A$6 billion government-imposed tax on the biggest financial institutions in 2017 to help bring the federal budget back into a surplus by 2021.

The Labor party is on track to unseat the conservative government, according to polls.

If elected, the new tax would raise A$160 million annually over four years to pay for financial counselling services for people in financial difficulty or for those wronged by banks, Labor leader Bill Shorten said in a statement on Monday.

“Labor will give bank victims a fairer chance to fight for their rights,” Shorten told reporters in the northern state of Queensland, a key battleground in the upcoming election.

“If the taxpayer is underwriting the security of the banks, I don’t think it unreasonable for the banks to give something back to the taxpayer.”

Over the past year, the financial services sector has been shamed by several scandals exposed by a Royal Commission inquiry, which included evidence of irresponsible lending and charging hundreds of millions of dollars in fees to customers without providing services.

The inquiry stopped short of recommending measures that would threaten the A$400 billion industry’s dominant position, but recommended dozens of initiatives to clean up the industry, which both major parties said they would support “in principle”.

The recommendations included additional funding for financial councillors, given the sector was struggling to meet the increasing demand for its services.

Billions in legal and remediation costs have already hurt the profits of the big four banks - Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group, and National Australia Bank .

“Banks will study this commitment in detail and expect to be consulted on its practical impacts should Labor form government after the upcoming election,” Australian Banking Association spokeswoman Anna Bligh said in a statement.

The tax would apply to the big four banks and others included in the S&P/ASX 100 index, based on their market capitalisation. ($1 = 1.4004 Australian dollars) (Reporting by Paulina Duran; Editing by Michael Perry)

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