RBNZ considers feedback after receiving 48 submissions over new user-pays prudential tax proposal

The Reserve Bank (RBNZ) has received 48 submissions following its public consultation on the Government’s proposed prudential levy.

The consultation, which took place from August 11 to October 16, sought feedback on the prudential regulation tax that Finance Minister Nicola Willis announced in May as part of Budget 2026.

The levy would help cover the cost of services provided by the RBNZ, according to Willis, and introduce user pays for deposit takers, insurers and key financial market infrastructure providers who clear, settle and record payments and transactions.

The RBNZ told interest.co.nz on Tuesday it had received a total of 48 submissions in response to the prudential levy consultation. Of those, 21 submissions were primarily focused on the deposit-taking sector, 21 on the insurance sector, five on the financial market infrastructures (FMI) sector and one submission from an unattributed sector.

According to the Government, NZ has 27 registered banks, 14 licensed non-deposit takers, 81 licensed insurers and five designated FMIs.

“Our analysis of the feedback is now underway and will be released in due course. We intend to publish both a summary of submissions and the full submissions received, with appropriate redactions for personal or commercially sensitive material,” a Reserve Bank spokesperson said.

“We anticipate this will be completed in early 2027.”

A prudential levy consultation paper issued in August estimated the tax would raise $209 million over three years. Deposit takers could pick up the tab for $113 million, or 54% of the total, insurers $81 million, or 39%, and FMIs $15 million, or 7%.

Based on total assets as of June 30, the proposal would see ANZ NZ, the country’s largest bank with $216 billion in assets, paying up to $12 million each year. Following behind, BNZ, ASB and Westpac NZ, with between $132 billion and $145 billion of assets each, would all pay around $7 million per year.

Kiwibank, with assets of $45 billion, would likely pay around $2.5 million, while IAG NZ, the country’s biggest insurer, could face an annual levy north of $5 million.

Treasury described the impact of financial institutions passing on the costs of a new prudential levy to their customers as “modest” in an impact statement, estimating the full levy pass-through to cause the cost of borrowing to increase by less than 1 basis point and insurance premiums to increase by less than 0.2%, on average.

At the Financial Services Council conference in August, RBNZ Assistant Governor for Financial Stability Angus McGregor said the proposed levy wasn’t going to change how the central bank operated.

“At its heart, this change is about changing the way we're funded,” he said at the time.