Plastic card tax to go?

alleepally

http://www.thepost.ie/web/DocumentView/did-343501853-pageUrl--2FThe-Newspaper-2FSundays-Paper.asp

As reported in the Business Post today. New report from the Competition Authority recommends the tax be scrapped immediately. I think everyone would agree with that. Can someone explain to me why the competition authority thinks the tax "restricts competition by discouraging new entrants to the market"... I'm trying to think of a reason and can't.. I mean, the tax is paid by the individual. The tax is imposed by the government. If a new entrant wants to take on Laser (for example) what competitive disadvantage would they have in getting new customers because of the tax? People pay it already and know it's not the provider of the card that is hammering them for the privilege of spending their own money in a convenient way.

Doubt we'll see a change in policy on foot of this report

tribble

Probably beacuse it causes the bank charges to be paled into insignificance beside the gov't levy.
Why would people bother changing if the bulk of the cost of the card is the same?

Zaph

The competitive disadvantage is precisely because of the fact that the individual pays the stamp duty on every card they hold during the year. Suppose you have an account with Bank of Ireland and you're hit for the charge on your Laser card, and then 6 months later Barclays decide to open a branch network in Ireland and you decide you'd prefer to bank with them. You get your Barclays issued Laser card and you're hit for a second stamp duty charge on it. For this reason a lot of people aren't inclined to switch banks, and even more so with creit card providers as the charge is even higher.

alleepally

zaph wrote:

The competitive disadvantage is precisely because of the fact that the individual pays the stamp duty on every card they hold during the year. Suppose you have an account with Bank of Ireland and you're hit for the charge on your Laser card, and then 6 months later Barclays decide to open a branch network in Ireland and you decide you'd prefer to bank with them. You get your Barclays issued Laser card and you're hit for a second stamp duty charge on it. For this reason a lot of people aren't inclined to switch banks, and even more so with creit card providers as the charge is even higher.

Thanks zaph. Wasn't thinking of it that way.

antoinolachtnai

The banks are laughing at the government on this one. On the one hand the government think there isn't enough competition in banking and Irish banks are making too much profit. On the other hand, the government introduced a tax which makes it completely uneconomic to change credit card.

The original rationale for the plastic tax was that stamp duty revenues from cheques was diminishing rapidly.

Victor

antoinolachtnai wrote:

The banks are laughing at the government on this one. On the one hand the government think there isn't enough competition in banking and Irish banks are making too much profit. On the other hand, the government introduced a tax which makes it completely uneconomic to change credit card.

Oooh, the concept of a bank levy comes to mind.

Tazz T

If they're going to get rid of it. This is the time to do it when there's money in the coffers. It really is an unfair tax, completely uncompetitive, but the gov are making loads from it, so they're going to be loathe to scrap it.

RainyDay

I see the Competition Authority spent €300k on a 'consultants report' to tell them that the card tax should be scrapped. I think we need a little competition in the Competitions Authority sector to improve the value-for-money we are getting (or not getting).

antoinolachtnai

Yes, they could have just come here and asked.

Seriously, where did you see the EUR 300k cost mentioned?

RainyDay

The €300k cost was referenced in this SBPost article

antoinolachtnai

Thanks for that. But it looks like they covered other topics as well as this one.

RainyDay

For €300k of taxpayers money, I'd be expecting that the provided the secret of eternal youth.