Cash must be king, Italy PM Giorgia Meloni tells shoppers | Hacker News Reader

Cash must be king, Italy PM Giorgia Meloni tells shoppers

thetimes.co.uk

35 pointswalterbell34 comments

Italian here, the reason behind this is that Italy is full of small enterprises, mon and pop shops, ... and until the end of the '90s tax evasion was so rampant that those shops and small companies have basically never paid a single lira in taxes. The people owning those shops are a core block behind the Italian right.

Shopkeepers in Italy are accustomed to dodging a certain percentage of VAT, and it all depends on people having cash at hand. When a society goes cashless, it's often a snowballing process, where people use cards more, and then withdraw less, so they have less cash at hand, and so on.

If people stop carrying cash with them, it will become impossible for them to refuse card payments, and thus dodging VAT would become impossible.

Sure, but cash is also an important privacy protection and if tax evasion is the cost then it's worth it. A society without cash is impossible to have true freedom of association.

I suspect you live in a country where tax evasion is fairly low.

Extremely high tax evasion (as in Greece around the financial crisis) can be absolutely debilitating for countries and their economies.

Privacy doesn’t mean much when you have 40% unemployment and people can’t get jobs to feed their families.

Your contention is that high tax rates lead to low unemployment? I feel like this is an easy hypothesis to test with data.

No, GP is referencing the Greek financial collapse and accompanying austerity measures. They made no reference to the tax rate being high, and even if it was, tax evasion to get around that is unsupportable.

I also highly doubt it’s an easy hypothesis to test. It’s not like you can set up an experiment. Good luck linking correlation to causation given the highly unique conditions in every country.

To be fair, the Greek government fleeced them first in the big scam, at an level non-previously seen before. The lack of trust is understandable.

>the Greek government fleeced them first in the big scam

For somebody who is not so familiar with Greek history: What are you referring to here? What was this scam you're speaking of?

Looking at Greece, I’d suggest that tax evasion is not worth it.

The point is, nobody gives a damn about that in Italy right now, except a very few number of people. Cash as a way of payment is accepted everywhere and is not threatened in any way, nor anyone has proposed to allow shops to refuse cash.

This is a 100% for tax evasion reasons, and the "official" motivation is that "shop owned should not be forced to pay fees for card usage" - a very stupid reason, given that it is mandatory for the average person to receive his/her salary on a bank account. Most banks only allow you to withdraw cash for free on their ATMs, and extol a high fee otherwise (a fee that is several orders of magnitude higher than whatever a shopkeeper pays with SumUp or similar services).

The point is simple: employees either don't vote for the right or they do vote for the right due to rampant misinformation about social issues (immigration! Europe! LGBT!). The Italian right is basically a well run scam, they blatantly lie to the public in order to be voted in, then they inevitably do some nasty stuff to help those they owe favours to, before getting inevitably shredded the next election. In Italy if you are a political party you only get ~3y to do your stuff before being destroyed in the next election, so most people in politics are just in for the short term.

This is diametrically opposed to everything the previous governments' had been trying to fight. It's an encouragement to evade taxes and a political move to appease voters and criminals. The annoyance of being refused payments with anything but cash with ridiculous claims such as POS being broken or whatnot, and not producing any receipt will come back for every law-abiding citizen, that will now be at fault for not possessing an "absolute" payment form, with this practice now being encouraged by the government itself, as up until now for the past few years you could simply leave if you were not allowed to pay with a card (thus making tax evasion much more difficult).

I'm reading drivel about privacy in this thread. Nothing was stopping you from paying in paper money. This isn't a move to protect privacy (which the average person forfeits by carrying around always-connected devices anyway, just to mention one).

This is the same reason taxi drivers in London were so opposed to card readers being a requirement in London taxi cabs, followed by them always conveniently being "broken".

They should just get rid of VAT, what a mess! It's a horrible piece of bureaucracy!

+ it's regressive!

It's not just VAT that was dodged, income tax was dodged the same way.

If we would take in account the monetary value of the huge amount of lost working hours that the companies must sacrifice by VAT, and the huge friction that VAT introduces in the relationship between customers and companies, it does not worth it.

Is a big problem for keeping a sane free market because it favors the few big companies, at the coast of hurting the million of small and tiny companies that support the economical tissue. It boost also the companies overseas that can eat the market alive. You are making your economy anti-competitive deliberately.

But politicians love it. They love being rewarded with one in each 5 goods and services for the privilege of sitting, doing nothing and not providing any single valuable service for it. (All the services provided are double taxed apart yet).

Is basically institutionalized mobster-bribe, tax-by-pass in each street coin, so is not probably that will end soon.

Yes. VAT hits poor people much harder than rich people.

This is great! It will surely help Rome in its efforts to overthrow Barcelona as the pickpocketing capital of the world!

Paywalled, but the text below was visible.

> Meloni, who was elected in September, is finalising her first budget, which is due to include a rule allowing shopkeepers and businesses to refuse cards and demand cash for payments up to €60.

I am really curious to know her justification for this move.

Privacy

To pander to tax dodgers.

If Italy wanted to avoid US credit card networks, they already have SEPA instant credit transfers, which the EU is pushing to make mandatory (versus an optional premium offering).

https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...

https://ec.europa.eu/commission/presscorner/detail/en/qanda_...

I had no idea they were planning to make SCT Inst mandatory (which will also effectively eliminate the upcharge many banks engage in for it).

Wonderful news.

Are businesses required to accept credit cards in Italy or is this a card network rule they're trying to circumvent?

Business are currently required in Italy to accept cards. Some still do not, but they can get a fine for it.

That's interesting. It's not the case in the US; many smaller places are cash only.

What is the justification for requiring businesses to accept cards?

In addition to tax-dodging, or selling off-the-books, there is one other, small legitimate reason for a vendor, to avoid card payments:

Most banks/payment processors would charge a fixed amount per small transaction. Amount varies a fair bit, but as an order of magnitute, say - €0.15 or something like that. This means customer that bought cup of coffee for €1.50 and insists on paying with a card, will cost vendor whooping 10% extra (it is not allowed for vendor to pass on card transaction cost to customer).

For a larger purchase, €30, €60, and more - transaction charge is negligible, naturally.

Cash comes with its own costs of course: from a quick google a shop paying cash into a business account pays 0.5-1% in fees. Plus issues with theft etc.

The government subsiding the payment infrastructure seems like a better solution. This is what India does with UPI and Rupay. Of course it's debatable if it actually lead to an increase in tax compliance.

> For a larger purchase, €30, €60, and more - transaction charge is negligible, naturally.

This is already the case. The status quo allows vendors to refuse card payments if the total is under €30.

In Spain, Bizum is used every time, just by knowing the phone number you can make instant transfers.

This is great.

Reply on news.ycombinator.com