He is also demanding the big spending initiatives on pensioners and the unemployed.

A spokesman for Senator Hinch accepted that the hit on banks was about smoothing the politics of the company tax decision, rather than being policy based, saying Senator Hinch was taking a lot of heat.

"This can move forward if the government helps us with a political solution," he said.

Earlier Friday, Finance Minister Mathias Cormann, who is the lead negotiator with the Senate, again ruled out denying the banks a company tax cut.

"We already introduced a major bank levy last year and effectively the major bank levy cancels out the effect of the corporate tax cut for the banks already," Senator Cormann said.

"We don't think it's appropriate to add to that further."

The government will not accept an increased bank levy either.

Labor is vowing that if the legislation is passed, it will revoke it if elected. It is also not ruling out reversing the first few phases of the tax cuts which were passed by the Senate last year. This gave a tax cut to business with turnovers capped at $50 million annually. The total package is worth $65 billion over a decade.


The first, already-legislated phases are worth $30 billion and the remainder, which the government is trying to pass, is worth $35 billion.

The government has seven of the nine Senate crossbench votes it needs. As well as Senator Hinch, it also needs new independent SA Senator Tim Storer.

The five banks affected by the major bank levy paid $10.8 billion of company tax in 2015-16, the latest year of tax data.

The bank levy raises about $1.5 billion a year, making a total annual tax bill $12.3 billion.



If the company tax rate was cut to 25 per cent, this would represent a reduction in company tax paid of $1.8 billion for those banks and, combined with the major bank levy, total tax paid would now be about $10.5 billion.

That means the banks, if given the company tax cut, would be pretty much in the same position as they were before the bank tax was introduced, but not until 2026-27 when they would get their company tax cut.