Credit card charge hike nets State up to €68m

THE Government has made up to €68m by increasing credit card charges.

In Budget 2003, Finance Minister Charlie McCreevy more than doubled the rate of stamp duty on credit cards from €19 to €40.

However, banks and other financial institutions have only started billing people on behalf of the Government since the beginning of this month.

The total amount collected from card holders will have to be paid to the Revenue Commissioners by July 1.

According to figures collected by the Irish Bankers Federation (IBF), the number of credit cards in circulation in Ireland in 2001 was 1.7 million, although the current number is likely to be much higher.

If the €40 charge is applied to every one of those 1.7m cards, the Government stands to net €68m.

However, the charge is applied to the credit card account and a maximum of two people can each have a card based on one account.

While there are no figures available on the number of these accounts, even if the levy was only applied to half the number of credit card holders, the Government coffers will be boosted by €34m.

At the time of the Budget, Mr McCreevy estimated the levy would generate €25.3m.

This latest bill for cards comes on top of charges applied to ATM and Laser cards.

The country’s 3.4 million ATM card owners and 900,000 Laser card owners have already had an estimated €17.2m removed from their bank accounts.

Each ATM card will cost its owner €10 a year and a Laser card will cost another €10.

More than 100,000 people have cut up their credit cards in response to the Government’s levy. IBF spokesman Felix O’Regan said people were simply reorganising their finances by adding an extra person onto an existing account or downsizing the number of credit cards in their possession.

“Some people have moved to consolidate their finances and are asking themselves if they need two different credit card accounts,” he said.

“Many have transferred the name of their spouse or partner onto an existing account and chosen to close another one so they will only have to pay one fee of €40.”

Chief executive of the Consumers’ Association of Ireland (CAI) Dermott Jewell criticised the levies and said the charges were unfair, particularly as the Government was pushing for a cash-free, paperless society.

He said: “Credit cards are ... a necessary tool if you are to operate in a cash-free zone. People were sold this idea of a cashless society by the Government and now they are locked into it, with their ATM, Laser and credit cards, they are forced to pay up.”

“Whoever come up with this plan to increase the levies on these essential tools recognised this.”

He said while the charges might seem like a small amount, they were yet another form of indirect taxation.