The bank levy on Australia's five largest banks will cost the sector A$8.95 billion over the five years to 2022, budget papers released last night show.Introduced in last year's budget (to the surprise of the sector, and the consternation of some) the levy is imposed at a rate of 0.015 per cent on most wholesale liabilities of the ADI that are reported to APRA each quarter.The government conceded in the budget that there were "slightly weaker-than-expected collections over the first two quarters of the levy," but this bank tax may yet cost the industry more than it feared. Over 2017/18 the levy will have produced $1.15 billion in revenue, This is projected to rise to $1.6 billion in 2018/19 and to increase by $100 million over each of the next three years.Tim Dring, leader of Ernst and Young's banking and capital markets practice, expressed doubts that the government will reach its forecast of raising $1.9 billion from the bank levy in in 2021/22."There could be some shortfall because major banks have been below system in the last half because of tighter lending standards that they have begun to impose on themselves," he said."They have reined in lending for apartments and for properties in certain postcodes and that business has been picked up by other non-bank institutions."Therefore the wholesale funding liabilities of the major banks look like they could start to reduce."