Did you know you’ve been paying billions in illegal fees for government services? This has been happening for over 20 years. Fees were added to services like passport renewals and tax bills when you used debit cards.
The problem started under the John Howard government. It was first found in New South Wales, where $144 million in illegal fees were collected. A taskforce was formed to look into how widespread this issue is at the federal level.
Major Highlights
- Australians have been illegally charged billions in merchant fees for government services over 20 years
- The issue was first uncovered in New South Wales, where $144 million was collected in illegal fees
- A federal taskforce was established to investigate the extent of the problem nationwide
- The Australian Taxation Office charges a 0.4% merchant fee for Visa debit cards and 0.2% for Mastercard debit cards
- The government has allocated $2.1 million to the ACCC to combat excessive and illegal surcharging practices
Historical Background of Illegal Government Surcharges
The roots of the government’s illegal merchant fees go back to the Howard government era, nearly two decades ago. Recent discoveries have shown the wide scope of these unlawful charges. They shed light on the federal government’s questionable practices.
NSW Government Precedent Case
In October, an investigation by the New South Wales government found 92 million transactions. These transactions had built up $144 million in illegal merchant fees from 2016. This case made the federal government look into its own payment systems.
They found similar credit card fees and interchange fees from the Howard government era.
Scope of Federal Transaction Charges
The investigation showed the Australian Taxation Office charged a 0.4% acquirer fee for Visa debit card payments. They also charged a 0.2% fee for Mastercard debit card transactions. Legal advice to Finance Minister Katy Gallagher confirmed that laws ban the government from collecting payment surcharges for taxes or fees.
| Payment Type | Typical Merchant Costs |
|---|---|
| Eftpos Transactions | Less than 0.5% |
| Visa and Mastercard Debit | 0.5% to 1% |
| Visa and Mastercard Credit | 1% to 1.5% |
These findings highlight the need for more transparency and accountability in the government’s payment practices. It’s important to follow laws and regulations.
“Merchants have the right to impose a cost-based surcharge on card payments, limited to the amount it costs the merchant to accept that type of card for that transaction.”
Government Response and Legislative Changes
The Albanese administration is taking action after finding out Australians were charged billions in illegal fees. They are introducing new laws to fix this big problem. These laws will make it legal for these fees to be charged, solving the issue once and for all.
New Legislation Introduction
Finance Minister Katy Gallagher, Treasurer Jim Chalmers, and Assistant Treasurer Andrew Leigh have spoken out. They say the new laws won’t add extra fees but will solve the long-standing issue. The government wants to be open and fair in its financial dealings with everyone.
Changes to Debit Card Charges
The government has made a big change. From January 1, 2025, there will be no extra fees for debit card payments at the Tax Office and Services Australia. But, credit card fees will stay, as the government keeps looking into payment fees and practices.
Future Implementation Timeline
The new laws aim to solve past problems, but there’s no set time for refunds yet. Auditing small charges over the years is a big task. The main goal is to make sure this doesn’t happen again in the future.
