Labor split over Australian Taxation Office credit card ban

• Australia's Labor ministers are publicly divided over the Australian Taxation Office's decision to ban credit card tax payments from Dec. 1.
• Small businesses warn the removal of credit card facilities will create severe cashflow problems and force price increases for consumers.
• The decision follows a broader government ban on card surcharge fees, which aims to save Australian consumers an estimated $1.6 billion annually.

The Australian Taxation Office faces growing political and industry backlash following its announcement to stop accepting credit card tax payments from Dec. 1.

The decision comes after the Reserve Bank of Australia implemented a ban on consumer card surcharges on Oct. 1, ending a 23-year arrangement to reduce processing costs.

“We really want the ATO to go back and talk to business about what they’ve decided to do here and think about how they can find a solution that works,” said Australian Labor Party Housing Minister Clare O’Neil.

Small business owners and business groups, including the Australian Chamber of Commerce and Industry, warn that removing the option with eight weeks' notice will severely restrict short-term cashflow flexibility.

Political opponents and crossbench independent MPs are calling for an immediate reversal of the policy to prevent small businesses from passing increased costs onto consumers.

The federal government previously capped card interchange transaction processing fees, reducing the maximum rate from 0.8% to 0.3% at the start of this month.

The tax office continues to direct affected small businesses towards its internal payment plan options, claiming the alternative interest rates remain lower than standard credit card rates.