The federal government's new levy is no excuse for Australia's biggest banks to bump up costs for everyday customers, Treasurer Scott Morrison has told parliament.
But, according to one leading economist, it could generate even more money for the commonwealth if they do.
Draft laws detailing how the levy will work were made public for the first time on Tuesday when they were introduced to parliament's lower house.
The legislation reaffirms the expected $6.2 billion in revenue forecast in the May budget, including $1.6 billion in the first year.
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It also enshrines the levy rate of 0.015 per cent per quarter for banks with more than $100 billion in certain liabilities - meaning any future changes would have to first get parliament's approval.
This threshold will rise with inflation each year.
Mr Morrison said the levy ensures Australia's banks are strong and competitive.
"The government is also committed to ensuring that Australia's largest banks are held to account and make a fair additional contribution to the Australian community which they serve," he told parliament.
The measure won't be a levy on savers, depositors or people with mortgages, he insists, rather it will create a more level playing field.
"The major bank levy does not give any bank an excuse to increase costs for their customers," the treasurer said.
"It is my expectation that, in setting their prices, banks will effectively balance the needs of borrowers, savers, shareholders and the wider community."
But Labor frontbencher Matt Thistlethwaite said no Australian worth their salt would believe claims they won't be impacted by the levy.
"They're saying it's regulated on deposits above a certain level with commercial institutions and that the banks are not going to pass it on," he told MPs.
"I think you'd have to be living in a dream world to think that the banks won't find a way to pass this onto the customer."
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Economics professor John Freebairn, from the University of Melbourne, agrees it's likely the banks will successfully charge customers for the levy indirectly, through a combination of higher interest rates and fees.
Should they do that, the increase in revenue will match the increase of costs to the bank caused by the levy, he wrote in The Conversation on Tuesday.
"If the output and incomes of the five banks to pay the levy expand over the next four years, then we would expect additional revenue to be collected by government to increase over time," he said.
Australian Bankers Association chief Anna Bligh repeated her calls on Tuesday for the levy only to apply for a set term.
She said banks will be making sure every senator fully understands the impacts of the tax over the next decade.
"This legislation is rushed, it's poorly designed, it's bad policy and it will have an impact not only on our financial sector but potentially the hip pockets of many many Australians," she told reporters in Sydney.
