18 Sep 2019
A radical plan to discourage cash payments and reduce runaway tax evasion has some Italians up in arms.
With one of the highest tax rates in Europe, Italy lost 107.5 billion euros ($118.5 billion) to tax dodging and under-reporting in 2016. The country has an evasion rate of about 30%.
The idea: offer consumers tax credits for settling their debts electronically while imposing a penalty on cash withdrawals above a monthly threshold.
Reducing the use of cash and encouraging electronic payments would go a long way toward cutting into an underground economy that accounts for more than 12% of gross domestic product.
Shops, restaurants and other small businesses often refuse electronic payment, citing high costs or broken card-reading equipment. Many fail to report the resulting cash transactions.
Interestingly, the cap-and-penalty proposal comes from the in-house think tank of Confindustria, Italy’s business lobby. Companies and professionals rank among Italy’s biggest tax dodgers, with an evasion rate almost 19 times higher than that of salaried employees.
Small business owners were quick to criticize the proposal, as were a number of politicians, including far-right populist Matteo Salvini, who slammed the proposed levy on cash as a Soviet-style proposal.
By Giovanni Salzano and Alessandro Speciale, Bloomberg, 17 September 2019
Read more at Bloomberg
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet