Cards' stamp duty to go when switching banks

Credit Card DutyThe Minister for Finance has sanctioned the exemption of stamp duty on credit cards, charge cards and ATM cards which arises where consumers switch to a new financial institution.

Mr Cowen said that there would be consultations with relevant bodies about the timing and scope of the provision before publication of the Finance Bill.

This measure is expected to cost €200,000 in 2005 and €3 million in a full year.

The Irish Bankers' Federation had called for the abolition of the duty on all cards, arguing that the expense incurred by consumers when they change to another financial institution was contrary to industry efforts to facilitate greater competition.

Yesterday IBF chief executive Mr Pat Farrell welcomed the measure. "The Minister's announcement facilitates consumer switching.

"Taken in conjunction with the forthcoming introduction of the IBF code of practice on account switching, which comes into force on February 1st, we believe that consumers are being afforded full opportunity to avail of the increasing range of choice that exists in the financial services market today" he said.

The Consumers' Association of Ireland had supported the IBF's call for the changes in stamp duty.

In 2002 the then minister for finance, Mr Charlie McCreevy, imposed a €10 annual fee on Laser cards, and a €20 combined tax on Laser and ATM cards. He also increased the duty on ATM cards from €6.25 to €10 per year, and raised the fee on credit cards from €19 a year to €25.

The IBF and consumer groups reacted angrily to the new charges at the time, saying the Government had increased the cost of banking by 131 per cent.

The IBF has also welcomed the reduction to 0.5 of a percentage point of capital duty on shares, which it says will make Ireland an attractive location for international financial services.

Pressure had grown for such a move after a number of other EU states abolished or reduced this duty.