Treasury: Prudential Levy Impact on Customers Would Be Modest

The New Zealand Treasury has estimated that if financial institutions pass on the costs of a new prudential levy to their customers, the impact would be modest. According to a Stage 1 Cost Recovery Impact Statement prepared by the Treasury with input from the Reserve Bank of New Zealand (RBNZ), even if banks were to pass on the full increase in costs to customers, the cost of borrowing would increase by less than 1 basis point and insurance premiums would jump by less than 0.2% on average.

The prudential levy is a new tax introduced as part of Budget 2026, which will help cover the cost of services provided by the RBNZ. The consultation paper estimates that the tax would raise $209 million over three years, with deposit takers picking up the tab for $113 million, insurers $81 million, and financial market infrastructure providers $15 million.

RBNZ Assistant Governor Angus McGregor said fundamentally, the levy isn't going to change how the central bank operates. 'At its heart, this change is about changing the way we're funded,' McGregor said.