Cheque duty of 5c per cheque abolished. What's next, rebates for cassette players and fondue sets?

Revenue Minister Todd McClay says cheque duty, which he describes as a relic from a previous age, will be abolished from July.

McClay says cheque duty is applied at five cents per cheque, and raises only about $4 million a year. That's down from $17 million in 1991-92 and $10 million in 2001-02 due to falling use of cheques. Cheque duty's being repealed in Budget legislation, and McClay says this will cost $15.5 million over four years.

“The Government’s focus is to ensure the fair treatment of taxpayers and to reduce customers’ compliance costs wherever possible,” McClay says. “Cheque duty is a relic from a previous age and no longer serves the function it was intended for. It is also distortionary in that other methods of payment do not have an equivalent tax.”

“While the popularity of cheques has declined, they are still common enough for the duty to be a cost for a significant number of businesses and people. Repealing the tax will benefit those who still use cheques, and it will also reduce compliance costs for banks and printers of cheques," says McClay.

"To seek a refund of cheque duty paid on any unused cheques, people should speak to their bank before 1 July 2014."

In a statement New Zealand Bankers' Association CEO Kirk Hope said abolishing cheque duty was a constructive step, and along with other Budget initiatives, will aid economic growth.

However, Labour MP Grant Robertson tweeted; "Cheque duty is gone. That'll turbo charge the economy. I expect to hear a rebate for cassette players and fondue sets next."

As reported by interest.co.nz in March New Zealand banks and the Government have no plans yet to end the use of cheques altogether. A report on the use of cheques by Ernst & Young, commissioned by Payments NZ in 2012, shows between 2004 and 2010 cheque usage in New Zealand halved.