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Updated July 03, 2017 18:47:03

South Australia's Liberal Opposition has decided to block a proposed state budget measure imposing a levy on five major banks.

Some Liberals expressed concern the banks might try to pass on the cost to SA households and borrowers, despite the Labor Government vowing to legislate so that cannot happen.

Opposition Leader Steven Marshall said the public would welcome the bank levy being voted down by the Liberals.

"I am 100 per cent convinced that nobody in South Australia wants more tax," he said.

"We believe unequivocally that SA is at a tipping point, the SA economy is teetering.

"We have the highest unemployment rate, we have a government that's got all of the wrong economic settings, our economy has ground to a halt with the highest energy costs in the nation.

"The last thing that any South Australian needs is another tax."

The budget measure now seems unlikely to get through the Upper House, where several crossbenchers have already indicated their opposition to a state tax on the biggest of the banks.

Premier Jay Weatherill said Australia's five biggest banks could afford to pay the levy and Parliament should let it through.

Mr Weatherill said the Opposition Liberals could not be trusted to fill the budgetary gap if the $370-million levy was blocked.

"It means that they will have to cut something else and what the Liberal Party does when they're faced with choices about budget holes [is] they cut jobs, they cut deeply into public services," he said.

SA Treasurer Tom Koutsantonis said Mr Marshall was being a weak leader.

"The big banks come knocking on his door one day and he changes his mind the next," he said.

"The Liberal Party has put protecting the big banks' super profits ahead of tax cuts for small business and investing in jobs.

"The Government will continue to promote its budget through the Parliament in its current form."

But Australian Bankers Association chief economist Tony Pearson believed blocking the tax would help promote job growth in the state.

"The tax raised the prospect of business investment not coming to this state," he said.

"It was sending a signal to the business community that the risk of being targeted for a tax just because you're successful is high in South Australia and it would have led to jobs not being created in South Australia, but outside South Australia in every other state and territory.

"We think this is a great decision, it'll reconfirm that South Australia is open for business, it'll help to rebuild business confidence in South Australia and we believe it'll help to promote inflows of investment, promote economic growth and create much-needed jobs."

Topics: state-parliament, budget, government-and-politics, states-and-territories, tax, federal---state-issues, sa, adelaide-5000

First posted July 03, 2017 16:51:33

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SA budget: Bank levy to be opposed by Liberals in SA Parliament - ABC Online