The European Central Bank has called upon Ireland to reconsider imposing a new charge on cash withdrawals from bank machines, as it would make using euro more expensive compared to electronic payment.
The Irish government has announced a plan to replace a flat charge on bank cards with a 12c fee on withdrawals from ATMs in Budget 2016 for encouraging use of card and electronic payments instead of cash. Depending on the card type, it has a cap between €2.50 and €5 depending on the card type. Although ECB was not consulted over the draft law, President Mario Draghi said that such a charge could affect the legal tender status of eurobank notes whose issuance the monetary authority authorises.
Draghi said, “The ECB understands the objective of encouraging the greater use of electronic methods of payment in Ireland. This should not, however, lead to legislation making the use of eurobank notes more expensive than electronic methods of payment, thus putting legal tender at a disadvantage”. “The ECB notes that the proposed stamp duty on ATM withdrawals could make the use of euro banknotes more expensive and would therefore recommend that the measure be reconsidered”, he further said.
In its response to ECB, the Department of Finance said – We note the opinion of the ECB. However the Department regards this matter solely as a domestic taxation issue over which there is national competency under EU treaties, and as such the draft legislation does not require consultation with the European Central Bank.
It said, “Ireland deems national sovereignty over taxation to be a very important matter and one which we vigorously protect”, adding, “We expect that the legislation process for the Finance Bill will be completed shortly, and have no plans to reconsider this matter”. It added – Ireland deems national sovereignty over taxation to be a very important matter and one which we vigorously protect. We expect that the legislation process for the Finance Bill will be completed shortly, and have no plans to reconsider this matter.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.