Small banks want deposit tax put on hold

Small financial institutions believe a possible tax on bank deposits should be put on hold until the Abbott government completes its tax review.

The Customer Owned Banking Association, in a submission to the tax discussion white paper, argues that any changes should be considered in a holistic fashion.

"Current arrangements are punitive for savers who are already facing record low interest rates and a new tax will only make things worse," the association's boss, Mark Degotardi, said on Tuesday.