A newly proposed bank levy from the Green Party has the potential to increase banking competition in New Zealand, but the country’s banking giants could just as easily pass on the cost of the levy to their customers.
The Green Party launched its election-year tax policy over the weekend, which revealed that, among other tax policies, it wants to hit NZ’s largest banks that have more than $100 billion in liabilities with a tax of 0.06% on their liabilities.
In banking, a liability is any obligation or debt that a bank owes to outside entities, such as its customers, other financial institutions, or bondholders. Deposits make up the largest liability for many banks.
The Greens’ policy is copying the same levy Australia has applied to its banking sector since 2017, when the Australian Government imposed a 0.06% tax on banks with liabilities over AU$100 billion. It primarily impacts Australia’s largest banks, which are ASB's parent Commonwealth Bank of Australia, Westpac, ANZ, BNZ's parent National Australia Bank (NAB) and Macquarie.
In New Zealand, the Greens’ proposed 0.06% levy would apply to the Australian-owned ANZ NZ, ASB, BNZ and Westpac NZ – who all have liabilities over $100 billion.
ANZ NZ had total liabilities of $199.1 billion in the March 2026 quarter, according to the Reserve Bank’s Bank Financial Strength Dashboard. BNZ had $130 billion, ASB had $130.3 billion, Westpac had $118.6 billion and Kiwibank had $40.1 billion.
This means Kiwibank, which is 100% owned by the NZ Government through its parent company, Kiwi Group Capital Ltd, would be exempt from the Greens’ proposed levy.
According to the Green Party’s tax policy, the proposed levy would raise $373 million during the 2027/2028 financial year and $420 million by 2030/2031.
‘It's the depositors that are going to pay it’
Massey Business School professor Claire Matthews told interest.co.nz the proposed bank levy “feeds into the narrative that banks are the bad guys”. She said it wasn’t necessarily a bad proposal.
“[But] it’s the way it's talked about, a levy on the banks. And yes, technically the banks are going to be paying it, but in reality they're going to pass it on to their customers in some form. It becomes a cost that they build into their pricing and effectively customers will pay it because it's a levy specifically on their liability,” she said.
“So that means it's the depositors that are going to pay it, probably in the form of lower interest rates that they will earn on their deposits.”
Matthews said when banks get discussed, the focus tends to be on the lending side. Borrowers, particularly home loan borrowers, what the costs are for them and how much money the banks make from them is always top of mind.
“We tend to forget the other side of the equation, which is the depositors that are providing the money that the banks can lend out and it does tend to be a lot of older people. It's their retirement savings that they've got in the bank and they're reliant on that income,” she said.
“And so [the proposed bank levy] means that they'll actually get a little bit less interest on their deposits. At least that would be what I would expect to see happen. That they get a little bit less interest on their deposits, which means there's a little bit less income available to them to supplement New Zealand Super.”
According to Matthews, the focus on borrowers compared to depositors is because borrowing is seen as an expenditure – something the banks have to pay out, like interest rates.
“If they can get lower interest rates, it means they're paying less. With depositors, they're not actually having to pay something out; they're just getting less in.”
Matthews said the proposed levy could potentially increase banking competition because if the big four banks couldn’t offer competitive interest rates, smaller banks could find it easier to attract more deposits.
“But it's a little bit hard to see,” she said. “I think there are better ways of dealing with banking competition.”
‘The Government should chase tax avoiders’
New Zealand Banking Association (NZBA) chief executive Roger Beaumont said banks in NZ pay their fair share of tax alongside millions of dollars in additional levies to fund regulators.
According to Beaumont, the association agrees with the Green Party’s view that global digital platforms should pay their full share of tax on New Zealand profits – just like NZ banks do.
The Greens have proposed enforcing a 5% withholding tax rate on the profits that big tech companies like Google, Microsoft, Facebook, Uber, Visa and Mastercard send offshore.
“Right now, the platforms pay next to nothing,” Beaumont said.
“The banking sector is already the biggest taxpaying industry in the country, paying around 22% of all corporate tax. Banks pay their fair share of tax alongside millions of dollars in additional levies to fund regulators,” he said.
“The Government should chase tax avoiders such as digital platforms. For example, last year Google paid only $4.6 million in tax here, despite sending $1.17 billion offshore. That’s less than 1% of what they sent offshore,” Beaumont said.
“Banks already make a net contribution to the New Zealand economy once you take into account the billions they collectively pay in tax and running their businesses here, and that they employ around 30,000 New Zealanders.”
The Green Party also wants to return the corporate tax rate to 33% for companies that make up the 0.7% biggest corporations in NZ, which the Greens define as companies with an annual turnover of over $30 million.
Currently, the standard corporate income tax rate for companies in NZ is a flat 28% on net profit. The NZ company tax rate changed from 33% to 30% in 2008 before being reduced down to its current rate of 28% in 2011.
The four Australian-owned banking giants have different financial reporting periods, but in the six months to 31 December 2025, ASB reported a statutory net profit after tax (NPAT) of $765 million and Kiwibank reported an NPAT of $103 million.
In the six months ended 31 March 2026, ANZ reported a net profit after tax (NPAT) of $1.259 billion, BNZ reported an NPAT of $494 million and Westpac reported an NPAT of $545 million.
ANZ, BNZ, Westpac and Kiwibank all declined to comment on the Green Party’s proposed bank levy. ASB hasn't responded to requests for comment.
‘Little League versus the heavyweights’
Sam Stubbs, the chief executive of Simplicity, which competes with the banks in KiwiSaver, told interest.co.nz he had previously been against the idea of the country’s biggest banks being made to pay levies.
“If it raises money from the banks and it sets a precedent, maybe it will help rein in their animal spirits. But my first instinct would be that they're just going to use it as an excuse to basically pass on the cost,” he said.
Stubbs said while this could end up happening in the short-term, although longer term it could end up “raising the stakes of the banks.”
“I think the levy is going to end up raising a bit of revenue and sending a signal. Will that work? Don't know. Will Kiwibank coming in there and providing a whole lot of lending capacity get bank margins down and really save New Zealanders money? Yes, it will.”
However, he would still prefer to see Kiwibank listed on the NZX. Stubbs said this move would let KiwiSaver managers capitalise on the bank and “take the Aussies head on in a sort of a battle of the balance sheets."
“The Government is not going to give Kiwibank the money to compete. So you could list Kiwibank on the stock exchange; you could give it 100% New Zealand owners only. And that would be a relatively easy way for Kiwibank to get the billions of dollars it needs to truly compete.”
According to Stubbs, $5 billion is all that's needed in equity for Kiwibank to “start acting like the All Blacks against the Wallabies.”
“Right now we're acting like the Little League versus the heavyweights,” he said. In 2024, Kiwibank was instructed to reach out to NZ investors about a possible $500 million capital raise to help it better compete against the big four Australian-owned banks.
A year later in 2025, Kiwibank announced the proposed capital raise, which had been recommended by the Commerce Commission and endorsed by the Government to help it better compete with the big four Australian-owned banks, was off the table.
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