Italian retailers prefer cash transactions.
That helps explain why the country ranks near the bottom in Europe in digital payment adoption, and is among the 30 most "cash dependent" major economies in the world, according to the latest Cash Intensity Index (ICC). This ranking, measures the effect of cash usage on the Gross Domestic Product in 95 countries around the world.
The currency preference also is why Italian business owners are cheering the 2023 draft budget proposed by new far-right Prime Minister Giorgia Meloni.
The new government's fiscal plan includes a measure to permit stores, taxis and other businesses to refuse electronic payment for purchases under 60 euros (about $63 United States). The measure will also lift the legal ceiling for cash payments from 1,000 to 5,000 euros ($5,263 U.S.).
Cash means tax trouble: Some Italians, however, are not happy with the proposed encouragement of more cash transactions.
They argue that more cash payments, which by one count already are at more than 80 percent across the county, will fuel what's known as the black economy. This is the sector that operates entirely outside the tax and regulatory system, as well as those who are known by authorities to owe tax, but who do not correctly report their tax obligations.
Italian tax officials already are dealing with a major tax evasion problem, reported to be about $100 billion euros ($105 billion U.S.) each year.
Operational, not tax cheating reasons: Italian business owners swear their cash preference is not about evading taxes.
"Of course I accept cards, especially because it's what tourists want to pay with," Naples restaurant owner Alfredo Russo told CBC reporter Megan Williams. "But the requirement in place now, where we can't say no to cards for smaller amounts, is excessive."
Russo is referring to the 1.95 percent commission he pays the bank on electronic payments.
"Targeting small businesses for not taking cards for small amounts is a war against the poor. The government should focus on going after the big evaders," Russo said.
Other merchants cite the hassle of taking credit cards. One told Williams that he didn't have a phone land line because of the extra cost. And since cell reception inside his businesses is bad, he has go into the street to process the payment.
Pressure on Italy to go more digital: Will the Meloni proposal actually pass? It might be tougher to do than the country's cash supporters would like.
Williams reports that Italy's imminent third instalment of 200 billion euros ($211 billion U.S.) from the European Union for its post-COVID National Recovery and Resilience Plan comes with strings attached. Italy must move to modernize to get the money, including cracking down on tax evasion and updating its digital infrastructure.
Still, the Meloni budget figures of 60 euros and 5,000 euros in connection with cash transactions earn this weekend's By the Numbers recognition.
You also might find these items of interest:
- Italy seeks taxes from cheaters & church
- Tourists, students to act as tax spies for Greek government
- Dolce & Gabbana use their tax troubles as fashion inspiration
- Marshmallow seller doesn't owe s'more (or any) VAT to HMRC
Advertisements
🌟 Search Amazon Business and Money Books 🌟
The text link above and image links below are affiliate ads. If you click through and then buy a product, I receive a commission.
