A taxing suggestion?

Milarky

Someone on 'Any answers' (claiming to be a solicitor) has suggested that stamp duty land tax should essentially be scrapped for all but the largest transactions and - he suggested - replaced a with a 'stamp duty' on every use of a credit (and debit?) card transactions 'at 1 to 2p'

Sounds scary if by that he means 1 or 2 percent - but it doesn't follow that customers would be charged at the point of sale does it? Firstly if applied to debit cards a tax to use 'your own' money it would never be acceptable.

Secondly there would be no practical way to split off one set of charges specifically for credit card use at the POS by the retailer charging two prices - as in theory they are entitled to do today to cover card use. So how would the revenue be collected by the 'credit card companies'?

I suppose it could be (they would show it on your statement as a separate fee as, say, 2 percent of total purchases) and this might not put off too many people. It would certainly put me off at those rates - but I'm not 'most people'.

Here's some Q&As I just thought up:

Q Should there be interest chargeable on the monthly fee?

A Probably not



Q Should this fee be repayable before anything else?

A Yes (although then you are charging people interest for the fee in effect because the remaindered purchases balance pops up by that amount)



Q What about this charge when you 'use a card to pay a card' [a balance transfer]?

A There shouldn't be any additional fee to those already charged because that amounts to 'double taxation' - nothing new has been bought and no new net borrowing arranged.

Some people are obliged to use a card and they would be charged. Others could afford to go back to cash/debit card use and they would escape the charge. So not much would change there in the 'misery' stakes. Overall this a rather like a tobacco tax - a subsidy for everyone else and a section of society required to finance a shortfall from scrapping a general tax on discretionary purchases.

[It's a non-starter isn't it? - unless it were recast as a £20 per account maintenance fee on all credit cards - and then watch the cascade of account closures!]

LongTermLurker

It would be a really nasty thing to bring in. It would have wider implications than just hitting the cc users, as it would also affect businesses. There are many, many people (myself included) who effectively subsidise their employer through expenses. I have to stay in hotels, buy petrol, run my car etc as part of my job and pay out hundreds of pounds a month in advance; if I had to pay a fee to do that, my company would either have to give me a float or provide company credit cards (obviously I'd rather have the cashback though

Sounds like someone wanting to make a name for himself as being "the man with the radical ideas" to me - a bit like the idea of scrapping road tax and taxing fuel instead (ie, lawnmowers, petrol stoves, electricity generators, etc :rolleyes:)

barak

Milarky wrote: »

..... a 'stamp duty' on every use of a credit (and debit?) card transactions .....

I heard that too on 'Any Answers'.

What may be of concern is that I recently received advice of changes to one of my card's Terms & Conditions including a new clause to the effect that:-

"Where a tax or other duty is imposed upon card agreements or card use, we will charge such tax to your card account."

I wonder why they need that clause in the T&C. Perhaps they know something we don't :undecided

Milarky

barak wrote: »

I heard that too on 'Any Answers'.

What may be of concern is that I recently received advice of changes to one of my card's Terms & Conditions including a new clause to the effect that:-

"Where a tax or other duty is imposed upon card agreements or card use, we will charge such tax to your card account."

I wonder why they need that clause in the T&C. Perhaps they know something we don't :undecided

That sounds like a general clause so that they can start charging customers immediately any tax is applicable to transactions without having to notify all customers and giving us all at least 30 days notice (because they have 'told' us already)