Treasurer Jim Chalmers has admitted Anthony Albanese overruled him when it came to the tax office planning to no longer accept credit card payments from the start of summer — leading to a seven-month delay to the ban.
The Australian Taxation Office had initially announced in early October that from December 1 it would stop processing credit card transactions for tax debts because it didn’t wish to absorb the Reserve Bank’s new ban on surcharge fees.
But on Friday, Dr Chalmers announced the introduction of the ban would be delayed until the start of July to give businesses more time to adjust to the new rules, with some arguing an inability to pay off their tax liabilities by credit card would cause cashflow problems.
Merchants are now banned from passing on costs unrelated to conducting a transaction and the ATO argued it didn’t want to continue accepting credit card payments if it meant they had to wear those wholesale expenses.
The Treasurer on Wednesday admitted his boss, the Prime Minister, had overruled him ahead of that announcement, after Mr Albanese told an Australian Chamber of Commerce and Industry dinner in Canberra on Tuesday night that he had intervened after receiving a text from ACCI’s chief executive Andrew McKellar.
“The Government stepped in. Last week on the Wednesday, I had discussions with the Prime Minister, we agreed that it would be appropriate to find a better way through for small business. We engaged with the business community on the Thursday, as we do frequently on these sorts of issues,” Dr Chalmers told Radio National on Wednesday morning.
Dr Chalmers insisted he was part of the discussions.
“We were part of those discussions as well. My office was engaging with the Chamber of Commerce, I have an open door, I’ve met with ACCI in recent weeks, in fact, and we were engaging on these issues as well,” he said.
“So, there were discussions on the Thursday, we did step in on the Friday. There was also work happening on the Wednesday.”
Mr Albanese had told Tuesday night’s dinner that he overruled his Treasurer after receiving a text from Mr McKellar.
“My door is always open. Andrew did text me last Thursday morning, and by Friday morning we had an announcement,” the Prime Minister said.
Mr McKellar told that dinner Mr Albanese had listened.
“Prime Minister, to your credit, your door was open. You engaged, you listened and you acted quickly to provide vital breathing space for small business,” he said.
“We welcome that response and we will use the additional time to work with the Tax Office to find a sustainable long-term solution.”
While the Reserve Bank of Australia announced a ban on surcharging in March, to come into effect on October 1, the tax office didn’t announce its proposal to stop accepting credit card payments from December 1 until the start of October.
Dr Chalmers said he only became aware of their plan in late September.
“They took that decision late in September. We insisted on a transition period, initially a couple of months, so that there could be some consultation, and you know, a legitimate transition period, and then we stepped in to make that transition period substantially longer because it was clear that more consultation is necessary in order for the ATO to get this right,” he said.
The Treasurer is also under pressure after the International Monetary Fund criticised governments with a high-spending agenda during a time of high inflation.
With Federal Government spending at the highest level in four decades, outside of COVID, the IMF suggested cuts to government spending were necessary.
“For countries with above-target inflation or elevated underlying inflationary pressures, fiscal consolidation can moderate demand and complement monetary policy efforts to maintain price stability,” the IMF said on Tuesday in its 124-page World Economic Outlook, titled Resilience Under Strain, Urgent Choices.
The IMF’s World Economic Outlook also forecast Australia would have a 3.9 per cent inflation rate this year, which would be among the highest in the developed world and well above the levels of the US, Canada and the UK.
But Dr Chalmers instead blamed the Middle East conflict, despite Australian Bureau of Statistics data showing non-tradables inflation related to goods and services sold in Australia rising by 4.5 per cent in the year to the end of August, compared with 2.9 per cent for tradables inflation linked to imports.
“Well, the World Economic Outlook makes it really clear that inflation’s going up around the world, and the market’s expecting interest rate rises in every major advanced economy,” the Treasurer said.
“And so that report that you’re asking me about is overwhelmingly about a very fragile global environment made worse by a war in the Middle East, which is pushing up inflation and weighing on growth here in Australia but around the world as well.”