A hike in the rate of the once controversial Major Bank Levy may be on the cards in Tuesday night's budget.

A broadening of the liabilities covered by the levy may also be part of one of many adjustments business taxes generally likely to feature in a 2020/21 budget with an eye-popping budget deficit.

For all the industry blowback in May 2017 when the then-Treasurer Scott Morrison blindsided the six largest banks with the levy, the tax raised A$1.56 billion in 2018/19 and in the latest MYEFO is estimated to collect $1.6 billion, rising to $1.8 billion in three years’ time.

The levy is six basis points on wholesale liabilities and a minority of deposit liabilities of CBA, NAB, Westpac, NAB and Macquarie Bank.

With the Term Funding Facility displacing traditional forms of wholesale funding and the avalanche of liquidity building exchange settlement account balances at the RBA, the liability pool covered by the current levy is declining.

There are two simple methods to broaden the base.

One is to revive plans announced, but never legislated, to cover almost all bank deposits – as first proposed by then Labor treasurer Chris Bowen in 2013 but discarded by Tony Abbott’s government.

The second and more likely scenario is to lower (or even scrap) the levy threshold first set at $100 billion (and indexed quarterly) to rope in scores more banks.

Banking Day understands the industry is aware a revision to the parameters of the levy is planned but so far little-discussed component of bargaining around the relaxation of responsible lending rules announced by the treasurer, Josh Frydenberg last week.