The federal government argues its proposed levy on bank deposits could make the financial sector more competitive, but investors and customers fear they could end up paying for it.
Labor has confirmed plans to set up a Financial Stability Fund from 2016 to provide deposits "insurance" in case of a bank crisis.
The banks are against the move and Treasurer Chris Bowen says it's up to them to decide whether they absorb the "modest" costs or pass them on - and potentially lose customers.
"It could be that a bank or banks decide to absorb some of that cost and make themselves more attractive to customers," he said on Friday.
"They could make a decision to pass it on, which would then mean their customers would bear that in mind and look at their returns and they may make a decision accordingly."
The levy of 0.05 per cent on bank deposits up to $250,000 is forecast to raise nearly $750 million in revenue in its first 18 months.
Opposition Leader Tony Abbott said the levy was part of scramble by Labor to find savings to stop the budget from falling further into deficit.
"It's just another smash-and-grab raid," he said.
The Australian Bankers' Association said the levy would hurt depositors.
"The banking industry wants to see the federal government reconsider this decision as a priority and would like to see the coalition rule out the fund should it win government," chief executive Steven Münchenberg said.
Customer Owned Banking Association, which represents credit unions and building societies, said small lenders like themselves should be exempt.
"Focusing the levy on the major banks means the levy is a prudent risk-management tool rather than a tax on depositors," spokesman Mark Degotardi said.
Think tank The Institute of Public Affairs said it would punish savers.
"Contrary to government rhetoric, the tax is not an insurance premium paid by bailed out bankers, but a cynical revenue grab from savers," senior fellow Julie Novak said.
However, the Institute of Chartered Accountants Australia supports it as an economic security measure.
"But if this is motivated by a need to balance the books in 2016, then that's a different story," institute chief Lee White said.
Mr Bowen said Australia's big four banks - Westpac, Commonwealth, ANZ and National Australia - had collectively made $94 billion in profits over the past four years.
