The public would tolerate extra credit card taxes because they were unaware of the duties they already paid, Department of Finance officials advised in the run-up to the last Budget.
In the Budget, the Minister for Finance, Mr McCreevy, increased stamp duty on credit cards from €19 to €40, while stamp duty on ATM and Laser cards rose to €10. The extra taxes, which were sharply criticised by the Irish Bankers' Federation and other industry groups, are expected to raise €50 million this year.
In a briefing note for the Minister prepared in the run-up to the Budget, Finance officials argued that extra stamp duty would not hinder the growth of a cashless economy.
"These products are, I believe, now sufficiently well established and people value them to the degree that they will not give them up purely because of a modest rise," one Finance official wrote.
The increases were justified because ATM card fees had not been increased since 1996, while fees on credit cards and charge cards were not increased since 1992.
A September 2002 opinion poll showed that half of credit card holders had "never noticed" the stamp duty charges already in place, the official argued. "The suggestion that doubling it will negatively impact on behaviour is not sustainable. I am satisfied that increases will not have a significant effect on the use of these products," the Finance official told the Minister.
The file, released under the Freedom of Information Act, reveals that the Department received no formal complaints from the State's banks, despite their public protestations.
The number of credit cards and ATM cards in use in the Republic has increased dramatically since 1996, according to official statistics.
The number of cards has gone up by 62 per cent, from 2.1 million to 3.4 million, while the number of transactions has risen from 97 million to 183 million - a rise of 88.7 per cent. The value of goods bought using credit and debit cards has shot up, from €5.3 billion in 1996 to €15.8 billion in 2001, according to the Central Statistics Office.
A third-level student who contacted the Department of Finance by e-mail to complain said her "emergency" account had been nearly emptied because of Government charges.
The account, in credit to the tune of nearly €40, was reduced by the €20 charge for combined Laser/ATM cards and a further €10 account charge.
The emergency fund had been kept in a bank account, she said, "as it is not safe to carry cash in Dublin; several of my friends have been mugged recently".
In reply, the Department's Capital Taxes Section justified the charge on grounds that such fees had not been increased for years. "Stamp duty is a good contributor to the Exchequer and this helps to fund public services while keeping the direct tax burden low, thereby facilitating continued economic success," an official said.