The South Australian government has abandoned its controversial bank tax, punching a big hole in the state's finances.
In a move welcomed by the Australian Bankers' Association and the wider business community, Premier Jay Weatherill says the proposed levy will not be pursued because it has no prospect of passing parliament's upper house.
"For all intents and purposes, the bank tax is dead," Mr Weatherill told reporters on Wednesday.
ABA chief executive Anna Bligh said scrapping the tax would provide business with greater confidence and certainty.
"Australian banks belong to all of us and they're about growth and driving good economic outcomes," Ms Bligh said.
"Today's decision will mean we can all get on with the job of making that happen."
Opposition Leader Steven Marshall said the demise of levy was a "major humiliation" for Premier Weatherill and Treasurer Tom Koutsantonis.
He said he was also cynical about the timing of the government's move, coming barely an hour after the announcement that Australia had voted yes for same-sex marriage.
"There's no doubt Labor are hiding under the cover of a big news day," he said.
"But it is a great victory for the people of South Australia.
"The tax wasn't going to create one single job. It was going to drive investment dollars out of South Australia."
Business SA chief executive Nigel McBride said the government's decision was a victory for common sense and recognition that, one way or another, all South Australians would end up paying the tax.
"At a time when we have so many other priorities in our economy such as jobs, export growth and population growth, let's leave this political distraction behind and focus on what really counts," he said.
Mr Weatherill said the government was yet to determine what changes would be made to cover the loss of the tax.
The levy was announced as part of this year's state budget and was included in a wider budget measures bill which was rejected by parliament's Legislative Council.
The bill was returned to the upper house for a second vote this week but has now been withdrawn.
It also includes tax breaks for small businesses and a new tax on foreign property investors.