Albanese talked up cheaper coffee, but Chalmers has to swallow his pride

“From tomorrow, your morning coffee could be cheaper”.

As if, prime minister.

It was the Reserve Bank that announced back in March that it would ban credit and debit card surcharges from October this year.

But it was the government that took the credit, with MPs hailing the move as a win for consumers. On social feeds from Albanese to the local backbencher, they said this would save consumers about $1.6 billion a year, and the price people paid for a meal, a coffee or their rent would be the same regardless of whether they paid by card or with cash.

Somehow, they missed the warnings earlier this year that cafes, shops and bars were likely to hike their prices to recover the money lost now they could not pass on transaction fees.

So when Prime Minister Anthony Albanese posted on his social media a week ago that coffee prices could come down because of the surcharge ban, he was instantly flamed by small business owners assailing him with straightforward explanations of why that simply wasn’t going to happen.

The gist of it? That the surcharges that banks levy businesses for transactions weren’t disappearing, just the ability to pass the charge on to customers. In an economy under strain, in which small businesses are doing it at least as tough as the consumers they serve, that would mean only one thing: the price of your morning coffee was going to go up, not down.

And so it has proved.

Price tracker Small Flat White estimates 17 per cent of cafes upped the price of everyone’s daily caffeine jolt – or roughly one in six.

But the issue didn’t properly catch fire until the Australian Tax Office showed just how out of touch it is when it announced it would no longer allow businesses, some of whom rely on credit cards to get around cash-flow problems, to pay their tax bills by credit card.

The ATO said it would stop accepting credit card payments for tax bills by November 30 because it could not absorb the cost of the extra credit card fees, which it was unable to pass on to taxpayers.

So while small business would have to cop it, either by absorbing the additional processing fees, or by passing on fees to already financially stretched customers, the ATO simply threw up its hands and walked away after a quick and dirty consultation period that looked like anything but.

If it looked like a double standard, that’s because it was.

The ATO’s cack-handed decision fed directly into one of the primary attack lines that the government’s opponents regularly take – that, at best, Labor doesn’t understand business and at worst, it doesn’t care about what the business community needs.

So it was the government that wore the blame, rather than getting the credit for the promised savings for consumers, with ministers struggling to explain why the tax office had taken the decision it had, contradicting one another, and insisting only about five per cent of businesses used the corporate plastic to manage tax bills.

The problem is, as the Australian Chamber of Commerce and Industry chief executive Andrew McKellar pointed out earlier this week, that five per cent equates to about a quarter of a million small businesses.

An idea that began with good intentions, to cut the fees we all pay each time we tap our card or phone, had turned into a tale of small businesses being punished and government double standards.

By Friday morning Treasurer Jim Chalmers was on clean-up detail, metaphorical mop and bucket in hand, promising the tax boffins would undertake further consultation and that the ATO would continue to accept credit card payments at least until June 30 next year.

Chalmers manfully attempted to convince people that the ATO’s actions did not amount to a double standard, but conceded that the issue had been raised with him and “we take that feedback seriously”. Hence, a temporary stay on the tax office’s credit card decision which will surely end up being permanent.

As far as humiliating back-downs go this wasn’t the worst one that Chalmers has had to endure, but it wasn’t pretty.

And that cut in the price of your daily cup of coffee?

Keep dreaming.

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