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Or people just don't want to pay inflated prices just so a payment processing company gets a nice % of every single purchase.
As I said in another post in this thread, I myself run a small business, and the vast majority of my sales are done through digital payments. I have no problem with this, but if I was to cut the payment platforms' fee, I could offer much better prices without having to take a hit on my margins (which themselves are sustainable and healthy, but not fantastic). It's not about me bypassing taxes, it's about providing a better price to my customers.
I've been to a few restaurants that are cash only. Is that an option for you?
If my revenue is say, $1m, that's roughly $23k that a CC or payment processor gets right off the bat, so I'm paying taxes on the $1mm but the cut takes a nice hit off my end profits. That $23k would be infinitely more valuable if I could reinvest it in my workforce, my product, my team, or myself.
I'm not a restaurant but I am a food service provider. I wish I could go cash-only but that would restrict who I do business with, which at the stage I'm at, is not really an option.
If you are talking U.S. income tax, that is incorrect. You are not paying taxes on $1 million, rather you are paying taxes on $977K since the payment processing fees are tax-deductible.
There's rules about the fees and making sure things are transparent to customers, but I think merchants are tending not to do it because of the pain of doing it. Otoh, the last time I was at my car dealer service center, they wanted to charge 3% to run a credit card, so that one went on debit.
If the government would care that the citizens are very honest with their taxes, they would create taxation laws that make it incredibly easy to be honest ("a market is controlled by incentives"). The mere fact how complicated the German taxation laws are should be a clear evidence that this is not the case.
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Then why would they encourage to use cash using lower prices? It’s more costly to handle cash than to pay credit card companies.
Also, countless examples of people digging into the cash register as part of their position perks, or usual management of remote petrol stations. Need to pay protection money? Cash. Need to pay a provider? Cash.
You can run the logs from the pumps vs the log book of fuel purchases. Similar for the convenience store. A brand name station is going to have a computerized register, and sales need to match supply for the most part. There will be some mismatch due to theft, but you can't hide enough cash sales for the tax savings to be worthwhile, IMHO.
I understand your point about handling cash requiring more labor (no self serve, armored trucks, etc) but I'd be surprised if the cash sales were less profitable than credit cards.
What evidence do you have they are?
It's also hard to see how using cash helps much in tax avoidance except for perhaps with tipping.
Other factors that are rarely mentioned in these debates include that cash must be counted and is far more error prone than cashless transactions. Most people counting this cash are actually 19 year olds or people who just aren't enthused by their job, so plenty of mistakes mean cashless transactions have a significant advantage in retail.
The lower the rung you're on economically, the more use you have for cash.
However buying things at a sex shop for example or how much I drink at the local bar on Fridays might be nothing I want my bank to know about.
But either way -- you also might be responding to the wrong comment.
My comment was about tax evasion, not tracking the purchasing habits of consumers -- which I think is bad.
I'll restate what I said: at the end of the day you'll have to deposit your earnings cash or not in a bank account and declare it as part of your business revenue to the tax man.
If you want to keep piles of cash under your mattress somewhere I guess you can, or if you want to purchase things in cash continously -- this might work for individuals like a single man operation-- but to run a legitimate business you will have to hit bank accounts with the money you earn one way or another and this will be eventually subject to an audit should it look suspicious enough.