The big four banks expect to pay $965 million combined in extra tax as a result of the government's new bank levy.

In a sign of the banks' campaigns against the tax increasing, Westpac, Commonwealth Bank and the National Australia Bank also wrote to their hundreds of thousands of shareholders protesting against the levy, with CBA taking the unusual step of holding "town hall" meetings with shareholders over the tax.

In public statements on Monday the banks outlined the expected hit from the tax. Westpac expects to take the heaviest blow at $260 million a year after tax while NAB ($245 million), ANZ ($240 million) and CBA ($220 million) also outlined significant costs.

In a sign they are increasing their political campaigns against the tax, their chairmen also wrote to shareholders criticising the levy and highlighting the potential impact on dividends.

CBA chairman Catherine Livingstone wrote to shareholders slamming the levy as "poorly designed policy" and said the bank wanted to hear shareholders' views.

"Your CEO Ian Narev and I would like to hear your views and respond to any questions you may have on the new tax. We therefore intend to hold an interactive telephone "town hall" discussion for shareholders in the lead-up to our annual general meeting in November," Ms Livingstone wrote in a note to the bank's 800,000 shareholders.

Westpac chairman Lindsay Maxsted wrote to the bank's more than 600,000 shareholders reiterating the banking industry's criticism of the levy, and including estimates of how the profit could potentially affect dividends if banks are unable to offset the cost in other ways.

"No company can simply 'absorb' a new tax - the impact of higher costs ultimately flows through to customers, shareholders, suppliers, staff, or some combination of all four," he wrote.

Mr Maxsted stressed no decision had been made on what Westpac would do with the levy. But he also said that if the full impact were passed on to shareholders it would be equal to a dividend cut of 8?? a share.

With the legislation yet to pass the Parliament, Mr Maxsted said the bank would be pushing for foreign banks also to be included. Currently only Westpac, Commonwealth Bank, ANZ, National Australia Bank and Macquarie Group will be targeted by the 0.06 percentage point charge on bank borrowings.

The bank also wants to include a "sunset clause" so that the levy is no longer charged after 2021, when the budget is projected to return to surplus.

In a letter to shareholders NAB chairman Ken Henry said the bank would continue to fight the tax.

"You know, I know and the government knows that a tax cannot be 'absorbed'. It must passed on somewhere," Mr Henry said.

"While we must balance the interests of all of our stakeholders, the options available to us are limited."

In question time, the Turnbull government confirmed the bank levy would be a tax-deductible expense for the big five banks affected by it, and that the estimated $6.2 billion revenue to be raised was a net figure.

Prime Minister Malcolm Turnbull told Parliament "the fiscal balance impact of the major bank levy totalling $6.2 billion over the forward estimates, these figures are calculated net of interactions with other taxes, principally corporate tax".

"That is why in the first year the net revenue received from the Commonwealth shown in the fiscal balance impact is $1.6 billion. In the second year it is $1.5 billion, because of the net."

A spokeswoman for Treasurer Scott Morrison later said the banks' figures published on Monday supported the government's revenue forecasts for the tax.

Labor has already said it will back the new tax, but it has supported calls for a looming Senate inquiry to look at extending it to big foreign banks trading in Australia.

But it is unlikely to withdraw support for the law if the inquiry is not extended to the foreign banks.

Mr Turnbull and Finance Minister Mathias Cormann earlier on Monday all but ruled out a call from crossbench senator Nick Xenophon for the levy to be extended to big foreign banks operating in Australia.

The Prime Minister said the levy would apply to foreign banks if they reached the $100 billion liability threshold.