A tax on bank deposits that could raise more than $400 million looks set to be amongst the measures that Treasurer Joe Hockey will announce in tomorrow's federal budget.

Consumers in Australia have not been charged a tax for depositing money into a bank account for more than a decade.

However, according to the Australian Bankers Association's chief executive, Steven Munchenberg, that looks set to change.

"This tax is actually an announcement of the former government, but it hasn't been ruled out by the current Government and until they do it remains in the budget," he said.

"So we were hoping that the Government would rule this tax out tomorrow. If it doesn't, it means that they are on track to bring in a tax on people's savings, on deposits that you have in the bank."

Mr Munchenberg said there has not been an equivalent impost on bank savings previously in Australia.

"The tax is being presented as necessary to fund, set up a big fund, in case a bank collapses in Australia, but we actually have a lot of other protections in Australia that make that extremely unlikely," he argued.

"So all this is really going to do is take hundreds of millions of dollars that might otherwise have been paid as interest on peoples' savings and give that money to the Government."

Deposits tax 'unnecessary' for saver protection

Treasurer Joe Hockey has already hinted the Federal Government will push ahead with a tax on bank deposits.

Asked on Channel Ten's The Bolt Report whether he would be introducing such a tax, he said the Government would have to impose unpopular measures to reduce the budget deficit.

Steven Munchenberg from the Bankers Association said it is being introduced under the guise of protecting consumers, but the reality is different.

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"Australian banks have very strong capital requirements, we're very, very closely regulated by people like APRA [the Australian Prudential Regulation Authority]," he said.

"We saw that through the financial crisis — while other banks around the world were collapsing, our banks were able to stand strong.

"And, in Australia, we also have a thing called depositor preference, which means that, in the unlikely event that a bank does collapse, depositors are actually the first people to get money out of the assets of that bank.

"So, given all of that, we don't believe it's a necessary to add yet another layer of protection. Particularly [one] that's going to cost people today for something that may or may not happen sometime in the distant future."

Mr Munchenberg said that given the climate in Australia's overheated property market, particularly in Sydney, it is a very odd time to introduce a bank deposit tax.

"Already people with savings in the bank are seeing their interest rates extremely low, historically low levels, and people who rely on those savings will already be feeling the squeeze," he said.

"So we don't believe it's a good time to be putting a further squeeze on people who have worked hard to create a bit of a nest egg that they've got planted in the bank.

"Our hands are tied, I mean we've opposed it when the former government announced it and we continue to oppose it, but if the Government goes ahead, well then unfortunately savers are going to have to wear some of that cost."

ING Direct backs deposits tax

Not everyone agrees the measure is unnecessary, including ING Direct treasury head Michael Witts.

He said it is an important step to protect Australia from the volatile global market.

"You've really got to look at it from an international view point and what's going on globally, and what we've seen over the last several years is that various governments have had to bail out banks in different countries, and all of those countries have now put in place very explicit deposit insurance schemes," he said.

"So I think it's generally a move in the right direction and so, therefore, I think from a consumer's viewpoint the additional stability that this potentially will bring I think is very good.

"And I think most consumers would agree with that, coming back to the insurance analogy, everyone has insurance — they don't like paying it, but they are appreciative of it when they need to draw on it."

Choice campaigns manager Erin Turner also criticised the possible bank deposits tax, saying there are already measures in place to protect consumers, and this is simply a revenue raising exercise.

"Certainty and security in Australia's banking system is incredibly important, but the financial system inquiry — a once-in-15-year examination of Australia's financial system — didn't think that this new levy was needed. Neither does Choice," she said.

"The current guarantees work well and provide protections for consumers and, if we're talking about new revenue raisers, consumers are open to new revenue raisers, but why this one?

"We need to explore a range of options, from looking at taxes on high-income earners, to broadening the base of GST.

"People are ready for a full discussion about everything, we don't need to jump to this revenue raiser."