Act leader David Seymour believes the review Finance Minister Nicola Willis has commissioned into bank tax settings will come to the same conclusion he already has: “they’re fairly taxed”.
It comes after the Herald revealed Willis had quietly asked Inland Revenue to scrutinise the appropriateness of tax settings applied to banks, with the potential to take possible changes to Cabinet before next year’s Budget.
She said tax policy was “highly technical” and Inland Revenue was “giving consideration to a wide range of options”.
“Our work to enhance banking competition is wide-ranging and as part of this, I have sought advice on whether the major banks are paying their fair share of tax,” Willis told the Herald.
Seymour, an associate Finance Minister in the coalition Government, said on Monday afternoon that banks are fairly taxed.
“Some of the biggest taxpayers in New Zealand are the banks. They’re all paying right on the 28% average tax rate as their company tax. There’s nothing to suggest that they are not paying the same share that they would if they were any other kind of business.”
He said that Willis, “like most ministers, is always asking for advice, always tossing around ideas”.
“But I suspect the outcome of that will be that they’re fairly taxed,” Seymour said.
Asked if he would block any proposal to increase the tax banks had to pay, Seymour said he would consider the question of “fairness”.
“I think the way to look at it is, ‘sure, they’re in banking, but if they were a dairy company or a manufacturing company or a retail company and they were doing pretty much the same stuff, making the same profit and paying the same tax, would you treat them differently?’
“One of the core principles of taxation is that like taxpayers pay tax alike, and unlike taxpayers pay tax unlike based on the size of the difference.
“You’d start with fairness as your principle, but maybe there’s more information I’m not aware of. I’m just looking at the headline figures published in the Herald the other day, which seemed to show a consistent pattern.”
Willis told the Herald she was interested in “how New Zealand’s bank tax regime compares with Australia and elsewhere, particularly in light of the significant profits Australian banks make from Kiwi customers”.
She said one difference between the two regimes is that Australia has a “major bank levy”.
That was introduced in 2017 by Australia’s then-Liberal/Nationals Government and imposed a levy on authorised deposit-taking institutions with total liabilities of more than A$100 billion ($108b). The Treasurer at the time, Scott Morrison, said it was a “fair contribution” that would “even up the playing field with smaller banks”.
It was forecast to raise billions of dollars for the Australian coffers, but the proposal faced pushback from some Australian-owned banks, which argued the levy would have to be passed to consumers.
The NAB bank submitted the levy is “not just on banks” but on its customers.
“It is a tax on every Australian who benefits from, and is part of, the banking industry... It is not possible to increase taxes by this magnitude without it impacting people.”
Asked by the Herald whether banks here should be bracing themselves for a similar levy, Willis said: “We’re continuing work in this area and I’m not ruling it out.”
Seymour said he would need to see more information about such a levy.
“I’ve seen the argument for that, and it goes something like this: banks inevitably get bailed out if they are so big that their failure would affect the entire economy,” he said.
“Maybe they should be putting something aside for that rainy day, if it happens one day, that’s the argument. It’s, in a way, a form of de facto deposit insurance and you can make arguments like that. They are interesting but I have to see the detail of it.”
Banks will pay levies to help fund the new Depositor Compensation Scheme, which came into effect last week after years of development.
Administered by the Reserve Bank, it insures deposits of up to $100,000 per person, per institution, at banks, building societies, credit unions and finance companies. It’s intended to protect Kiwis’ money in the event one of these institutions collapses.
Willis has said she is unlikely to provide further details until next year’s Budget but has suggested proposals could be technical in nature.
“The issues are to do with the way that parent banks and branch banks in New Zealand interact for tax purposes,” she said.
“There’s some very arcane and complex tax law in that area where the OECD have guidance and New Zealand does it slightly differently.
“Also looking at issues such as the Australia major bank levy, which is something that we don’t have here. So there’s a range of highly technical, highly complex issues with the way that banks are taxed, and we’re just doing a check-in to make sure that it’s resulting in an overall fair system.”
Labour’s revenue spokeswoman Dr Deborah Russell said Willis’ “sudden interest in the tax paid by banks is welcomed”.
Willis said on Monday she had commissioned the review last year (it only came to light on Monday after an Official Information Act request by the Herald).
But Russell said it didn’t make up for National deciding to give “tax breaks to landlords and tobacco companies” and actions the Government had taken that affected the banks.
“The Government needs to be looking at the overall sustainability of our tax system and whether Kiwis are getting a fair deal,” she said.
The Greens’ co-leader Marama Davidson said “just looking at tax isn’t enough” and she wanted action “rather than empty rhetoric with no follow through”.
“We want to see the vertically integrated banking sector structurally separated into wholesale and retail banks with tight legislative restrictions on cross-ownership.
“The Government should apply a retrospective windfall tax on banks that have exceeded the OECD median return on equity for the last three years, equitably crediting the KiwiSaver accounts of all New Zealanders with the resulting tax receipts.”
Davidson said the Greens had previously produced a discussion document that explored taxing excess profits by banks.
“The aim of excess profits taxes is to level the playing field, so that big businesses are not able to profit to excess when so many people are struggling.”
When asked about a windfall tax on Monday, Willis said: “That’s not what we’ve been looking at.”
An ANZ spokesperson said the bank had not held discussions with Willis about the proposals “but are happy to engage with her”.
“International finance sector tax matters are complex and varied and can have unintended impacts on consumers and shareholders.”
Westpac NZ said it was one of the country’s largest corporate taxpayers.
“We’ve paid more than $1.2b of tax over the last three years and are helping Kiwi communities in many other ways,” a spokesperson said, citing the likes of the Westpac Rescue Helicopter.
“We would welcome any dialogue with policymakers on tax settings, but would need to see the detail of proposed changes before commenting further.”
Asked about the major bank levy concept, an ASB spokesperson said: “Stated reasons for the introduction of levies in some countries include making major banks more resilient by reining in risky borrowing and lending practices, repaying GFC bailout money, and, in some cases, creating an emergency fund so taxpayers won’t have to foot the bill again should a big bank fail.
“New Zealand is addressing this in other ways. For example, through higher capital requirements and a deposit compensation scheme funded through a levy on banks, which came into force last week.”
BNZ was also contacted for comment.
Jamie Ensor is a political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.