SENIORS and bankers alike have welcomed Prime Minister Tony Abbott's announcement this week that the government will not proceed with its budget measure to introduce a 0.05 per cent bank deposit tax.
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The levy, which would have applied to all deposits worth up to $250,000, had been widely opposed by banks, and the industry had foreshadowed moves to pass the costs on to consumers.
National Seniors chief executive Michael O'Neill said the tax had made little sense.
"Retirees relying on simple investments welcome the government's decision to drop the tax," he said.
"By penalising savers already struggling with static interest rates, a deposit tax would have sent the wrong message."
Australian Bankers Association executive director industry policy Tony Pearson said the decision to scrap the tax, which had widely been expected to go ahead, was a wise policy move and a welcome end to the uncertainty for savers.
"Millions of Australians who rely on their savings for current and future income would have been hurt by this tax, including self-funded retirees," he said.
He said banks had already paid $533 million in levies in 2014 as well as $13.5 billion in taxes across all three levels of government.
