The European Central Bank has recommended that Ireland reconsider a plan to impose a new charge on cash withdrawals from bank machines, citing concerns it would make the use of the euro currency more expensive than electronic methods of payment.

As part of Budget 2016 the Government announced a plan to replace a flat charge on bank cards with a 12c fee on withdrawals from ATMs.

This was done to promote the usage of card and electronic payments instead of cash and is capped at between €2.50 and €5 depending on the card type.

The ECB was not consulted on the draft law, but in an opinion published on its website, President Mario Draghi said such a charge could affect the legal tender status of eurobank notes whose issuance the monetary authority authorises.

"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," Mr Draghi said.

"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."

In a statement the Department of Finance said it noted the opinion of the ECB, but considered the matter "solely as a domestic taxation issue"

It said there is national competency for such matters under EU treaties and, as such, the matter did not require consultation with the ECB.

"Ireland deems national sovereignty over taxation to be a very important matter and one which we vigorously protect," the department said. "We expect that the legislation process for the Finance Bill will be completed shortly, and have no plans to reconsider this matter.

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.
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.