The banking industry is lobbying the Department of Finance to remove completely or reduce the stamp duty payable on credit and other plastic cards ahead of the December Budget.

The Irish Bankers' Federation (IBF) says it is "taking every opportunity" to convince the Government that the duty is anti-competitive and contradicts the Government's own drive to promote electronic bill payments over cash.

The tax, which is deducted from cardholders' accounts on April 1st, increased last year from €19 to €40 on credit card accounts.

Failing a dramatic U-turn by the Minister for Finance, Mr McCreevy, the IBF hopes the the way the duty is administered at least will be adjusted so that people who are moving from one credit card provider to another are not charged twice.

This additional charge on closing an account was introduced as an anti-avoidance measure earlier this year, but has acted as a disincentive to consumers who want to switch to card providers that offer better interest rates or balance transfer terms.

Consumers seeking to move from a standard card to an affinity card or to a gold, zinc or platinum card will also be hit twice.

"To us it seems grossly unfair that if people change their card in July, they will pay one €40 charge for April to July, then a further €40 from July to the next April," a spokesman for the IBF said.

The banking industry sees this double charging as ironic in light of the Competition Authority's investigation into the barriers the banks are accused of imposing on consumers who attempt to switch current accounts.

Mr Nicholas Moore, of AIB's personal and business banking division, said the extra €40 penalty for moving meant choice was being taken away from the consumer.

"We see it as anti-competitive and an impediment to growing the card base," he said.

The stamp duty was "put in with a steam roller", according to Mr Eddie Ryan, head of card marketing for Bank of Ireland. "It will cost €80 a year if you change. That's just killing the consumer," he said.

Combined ATM and laser cards now cost €20 a year. Laser cards can also be used to access credit if there is a current account overdraft.

"Laser cards are half the cost. Can someone explain why it is half? You can just as easily get an overdraft on your current account, which is a credit facility," Mr Ryan said.

"A lot of people are stating that there is very little movement in the market now," he added.

Recent credit card marketing moves hampered by the charging of stamp duty include Ulster Bank's introduction of a zinc card with the most competitive rate available on the market; Ryanair's launch of a credit card in association with card provider MBNA; and AIB's affinity Visa card link-up with Dublin Institute of Technology.

Bank of Ireland has also announced that it will reduce its credit card interest rates and offer a rate of 0 per cent on purchases for six months and a 12-month balance transfer rate of 2.9 per cent.

If financial institutions do not try to shake the market up, total inertia will creep in, Mr Ryan said.

One marketing tactic that has attempted to use the stamp duty charge to its advantage is Ulster Bank's guarantee to give a €40 loyalty bonus to customers who spend €5,000 a year on their credit card. A spokeswoman for Ulster Bank said it expected 25,000 credit card customers would qualify for the €40 reward by the end of the year.

Ulster Bank would repeat the incentive next year, she confirmed, and would consider making it easier for more customers to qualify. "It has been an excellent selling point for us," she said.

Credit card providers are now using the duty to convince customers that, as the €40 charge applies per account, they should make use of the facility to name additional cardholders on the account.

"As you are no doubt aware, the Government tax on all credit card accounts has increased to €40," a letter from MBNA's customer marketing department dated October 2003 states.

"Add a family member, partner or close friend to your account and save on the cost of having another account," it says.

Up to three are allowed. The downside is that this increases the chances of card-holders failing to pay off their share of the debt on a monthly basis, with multiple cardholders making control on expenditure more difficult.

That opens up the prospect of better profits for card providers as card-holders incur double-digit interest on the whole amount.

Stamp duty on credit cards has also been labelled "a tax on technology" by the IBF, which argues that it is inconsistent with the Government's National Payments Strategy - its campaign to improve the efficiency of bill payments.

Figures from the Irish Payments Services Organisation (IPSO) show that Irish people are cash-loving consumers.

Last year, Irish consumers made a total of 148.9 million ATM withdrawals, representing a total value of €15.7 billion. There were 125.4 million cheque transactions and other paper debits with a total value of over €1,015 billion.

By contrast, there were 115 million debit and credit transactions, with payments arriving at a value of €9.1 billion - €6.6 billion less than the value of ATM withdrawals.

"Tax on cards is not consistent with a less cash-dependent society,. "Half the army is employed driving Securicor around the State. It's a very costly way for banks to process transactions," Mr Ryan added.