Labor MPs want to find a way to keep ATO credit card payments

Frustrated Labor MPs are pushing the federal government to find a permanent solution to ensure the Tax Office accepts credit cards from businesspeople with cashflow problems, fearing a months-long campaign from business groups and the opposition over another unpopular economic policy.

Three days after Treasurer Jim Chalmers stepped in to delay the Tax Office’s ban on credit card payments, the blowback from the Reserve Bank’s decision to end credit card surcharges continued to dominate parliament.

Several Labor MPs, including ministers, said it would be much better if the government soon came to some sort of agreement with the ATO to allow credit card payments beyond next July so that business owners were not left in limbo for months.

“We don’t need to offend more people after the tax changes in the budget. At least those policies had merit and were worth the fight,” one MP said.

The ATO said last week that it would ban credit card payments because it wasn’t appropriate to pass the $200 million a year in fees on to taxpayers. The government will now provide additional funds to the Tax Office to extend the transitional period, although Chalmers has not revealed the dollar amount of the subsidy.

This means taxpayers are effectively subsidising the ATO so that other taxpayers don’t pay the surcharge. The government may need to continue funding the ATO to find a lasting solution.

The drama surrounding surcharges, which were killed off by the RBA in a move supported by Labor, compounds the growing alarm of some Labor MPs that the government lacks economic nous to deal with inflation and deteriorating real wages.

Some GP clinics are increasing fees in response to the surcharge ban and some private schools have stopped taking cards. StrataPay, which accepts payments for body corporate managers, released a note last week acknowledging that some operators would stop taking cards.

Senior members of the opposition asked questions in parliament on Monday about an anonymous quote from a Labor MP published in this newspaper last week: “I don’t think it’s acceptable for us to say it was the ATO’s decision, not ours. If that’s the case, then there’s something seriously wrong with our government. There is no one in cabinet with any small business experience.”

Small Business Minister Anne Aly said she learnt of the ATO’s decision only when the agency made it public, but opposition frontbencher Dan Tehan claimed ministers were covering up the fact that they worked with the Tax Office and were aware of its decision.

Chalmers sought to highlight the opposition’s own divisions by raising former treasurer Josh Frydenberg’s call for a GST increase as he mulls a return to politics.

Opposition Leader Angus Taylor said Labor had no instinct for the concerns and habits of small business owners.

“Since Labor came to power, over 50,000 businesses have gone bust. Killed by power bills no one can afford, new taxes no one voted for, and a credit card ban no one was told about,” Taylor said in the House of Representatives.

Labor MP Jerome Laxale, who has long advocated for the surcharge policy, tried to inject context into the debate by saying some banks had reduced their surcharge rate and that about 5 per cent of small business owners used credit cards to pay tax bills.

“Let’s not take away from the importance of this reform: 90 per cent of all businesses always absorbed those costs, and they now have access to cheaper merchant charges because of this reform,” he said on News24.

“So there are cheaper costs for businesses out there.”

Emergency Management Minister Kristy McBain said banks should not be able to ask for a fee to provide point of sale services.

“These are banks making billions of dollars in profits every year, and small businesses are already paying account-keeping fees and a range of other fees directly to their banks,” she told the Seven Network.

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