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Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and

by carlob 11y ago

Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and often when you visit a doctor they'll say: do you want the invoice or a discount? A couple of friends got married recently and I found out they paid over half of what the owed in cash to get pretty decent discount. So before we talk privacy and company let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe.

agentgt 11y ago
This is exactly what happened to Greece (my in-laws are Greek). Greeks and Greek Americans are completely cash based. Consequently the government has no idea how wealthy its residents are and tax evasion is extremely rampant. I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact.
- kamaal 11y ago
  >>I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact. These sort of problems run quite deep and have unintended consequences. If money is not traceable, you also give way accountability. Opening up a door for corruption to happen easily, unchecked and unaccounted for. Rinse - Repeat for some time and you will see there are new problems due to corruption, which breed other new problems and so on..
majewsky 11y ago
So what is it then that makes this kind of fraud common in Southern Europe but practically nonexistent in Germany? (judging from my experience)
- pjc50 11y ago
  It's that nebulous thing called "cultural factors". There are two stable equilibrium points in a society, one where most people play by the rules most of the time and one where most people ignore the rules most of the time. It's quite difficult to shift from the latter to the former; it seems to be historically associated with Protestantism, which itself could be seen as a movement to ""clean up"" religion from corruption.
- kingmanaz 11y ago
  Read Tacitus' writings on Germania. While the Mediterranean and Near Eastern peoples were issuing violently long-winded, and ultimately hollow, discourses on the subject of ethics, Northern peoples were holding to faithfully monogamous marriages and living in small communities in comparative peace. What the Southern peoples preached the Northern peoples lived.
  - nickik 11y ago
    Yeah lets look back to a 2000 year old mistly fantasy document that romans used to moralise their own society for our own explaitions. That seems like a great idea. Its not like that line of thought ever had bad consequences.
    - hguant 11y ago
      I'm going to treat this like a real comment instead of a sarcastic quip. The reason we go back to '2000 year old [not sure if 'misty' or 'mostly', both work in interestingly different ways] fantasy document[s]' is because there are universal truths about the human condition. The value of a statement is not in its newness or its antiquity; it lies in the truth of the thing being said. Brashly rejecting an idea because it is old has the same merit as rejecting an idea because it came from a woman - that is to say, none.
studentrob 11y ago
Taiwan is mostly cash and they use a receipt lottery to encourage people to buy from vendors who give receipts. Each receipt has a number and there's a lottery at the end of the month with cash prizes. Also, people here know they can report a business for not giving out receipts. They might get a share of recovered taxes for that. I don't know all the pros and cons of that setup but it seems there are ways to maintain a cash based system and still collect taxes.
- kyrra 11y ago
  China has something similar as well, called the Fapiao: http://www.china-briefing.com/news/2013/08/13/understanding-chinas-fapiao-invoice-system.html http://www.china-briefing.com/news/2013/08/13/understanding-... Though as I understand it, it requires a dot matrix printer to populate these receipts (or writing them by hand).
  - studentrob 11y ago
    Hmm I don't remember receiving many receipts in China. I spent 3 months there over two occasions a couple years ago. Taiwan's implementation appears more successful to me. Fapiao means receipt, so that makes sense. There is some required hardware or software but doesn't seem any more cumbersome than a credit card machine and printer. Nearly every shop has them in TW. Edit: reading further I see China is rolling out their lottery in more areas the last few years
    - SimpleMinds 11y ago
      That's because you have to actively ask for it. If you don't, they never (almost) give it to you, as business buy those fapiaos from gov. We asked for them quite often and they gave them each time. Total, we won 2 cans of Coke and maybe 10 yuan :) Fun fact - fapiaos you get might be fake. Once I got fake fapiao, printed from fake printer, in fake taxi. I know it's fake because I tried to validate it online (there's service for that) after I noticed I got fake bill :/
      - 11y ago
kamaal 11y ago
>>let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe. Any where, where there are cash transactions this is an issue. In India, apart from salaried people taxed at source almost anybody else rarely if ever pays taxes. Its assumed taxes are only what stupid people pay. And since they make up for a huge vote bank, any move to introduce reforms for cashless payments are resisted. Plus contribution to political parties happens in cash so politicians themselves don't want it. This leads to a situation where the tax burden is expected to be endlessly on the salaried middle class and they are expected to pay up unfairly all the time. Privacy aside, the true reason is people just don't want to pay taxes.
- ska 11y ago
  Mostly I think that peoples support for paying taxes is proportional to the perceived value they receive from them, and how fairly they are being applied (c.f. Denmark vs. USA - and note that "perceived" is important, and subject to manipulation) I don't know the details, but plausibly could you argue that India's real problem lies in government inefficiency and/or corruption?
  - kamaal 11y ago
    >>plausibly could you argue that India's real problem lies in government inefficiency and/or corruption? Your are assuming corruption is an phenomenon that is generated in total isolation without other factors contributing to it. Both government inefficiency and corruption have roots in lack of accountability.
    - ska 11y ago
      I suspect you can chase the turtles down quite a ways - and I already specified I don't know the details. It wasn't really about India but about the idea that people somehow inherently dislike paying taxes, rather than feel like they are getting ripped off when paying them. It's a complex issue regardless of the country and culture.
borispavlovic 11y ago
There will always be ways to evade taxes and the problem with Italy, Greece and other southern societies is not technical but a weak government which can't impose the already existing laws to their citizens, public workers and politicians themselves. Going cashless is not an excuse for an incompetent tax office and Ministry of Finance.
- lmm 11y ago
  There will always be ways to evade taxes, but the harder we make it the less tax evasion there will be.
  - AnthonyMouse 11y ago
    You could also say "there will always be crime, but the harder we make it the less there will be." Technically true but useless for evaluating the cost/benefit of any specific proposal. If the question is, is it worth pervasive mass surveillance, the answer is no.
- sametmax 11y ago
  I don't know for Italy, but in France, you litteraly can't start most business without doing 20% of your money off black market. Once you are big enough, it gets easier and you can go full legal, but to start, it's terrible.
spystath 11y ago
Exactly the same thing happens in Greece. It used to be very common for shop-owners to "forget" to give you the receipt. After the crisis broke up though people are way more likely to ask for receipts as there are some incentives to do so (minor tax cuts for a specific amount of receipts etc.). Credit/debit card transactions have also tripled since 2008 or so which is good I guess. Things are different with doctors, lawyers etc. though, since virtually noone accepts cards and sometimes you might even need to argue with them to actually print you one. Thus you have some ridiculous incidents of doctors with apparent annual income of 9000 euros which is ridiculously low even for lower class standards. It's getting better, but it's a whole culture that needs to change for these incidents to cease. People using credit/debit cards is a step to the correct direction. In our case a cashless world might even be good.
- adamc 11y ago
  Does the government not prosecute obvious cases of tax evasion (9000 euros example)? That's what would likely happen in the U.S.
  - spystath 11y ago
    It should but it doesn't (or didn't). Up to recently there was practically no investigation on such cases and tax evasion on such circles was rampant. You drive a BMW, run a private clinic in an expensive area in Athens and your annual income is 10k euros. That's OK, I mean why would you lie to me? OK, I'm probably exaggerating but you get an idea. Since 2013 or so there is some effort to audit professionals with such declared incomes but it is practically impossible to check a backlog of 20+ years of cases especially with the glacial pace that the revenue services move.
clarkmoody 11y ago
> cost for society You meant "cost for government," right? It sounds like the slice of society that gets the cash discount is benefiting greatly from this "hidden economy." Saving 50% on a venue is a big win for the newlywed's pocketbook, leaving more money in their pocket to buy goods for their new household.
- zzalpha 11y ago
  True. If you don't believe the government has any role to play in, say, paving roads, maintaining bridges, etc, then there's no "cost for society". Well, until the bridges start falling down, anyway...
  - clarkmoody 11y ago
    Ah, the tried-and-true roads & bridges argument. No, I don't believe the government is necessary to do those things. But if you look at actual government spending, these sorts of infrastructure projects are dwarfed by things like military spending, which could use a reduction.
    - pc86 11y ago
      Let's keep in mind we're talking about Italy here. So the knee-jerk "BUT DRONES" response is probably less accurate than if we were talking about the US or the UK or something.
      - mseebach 11y ago
        Yes, let's indeed keep in mind that we're talking about Italy here. http://www.voxeu.org/article/public-sector-inefficiency-and-firm-productivity-italy http://www.voxeu.org/article/public-sector-inefficiency-and-...
    - deleted 11y ago
      [deleted]
    - rsync 11y ago
fweespee_ch 11y ago
> Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and often when you visit a doctor they'll say: do you want the invoice or a discount? 1) Require receipts for all transactions. 2) Offer 10% of recovered cash for anyone you report who doesn't follow #1. Add the penalty on top of any recovery [e.g. Current Fines + 10%] 3) https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf 4) Taiwan-style receipt lottery [ http://www.tealit.com/article_categories.php?section=living&article=lottery http://www.tealit.com/article_categories.php?section=living&... ]
- andrepd 11y ago
  Portugal has implemented 4) a couple years ago.
pc86 11y ago
There's a super easy fix for that, if the people have the will to demand it: require receipts for all transactions, allow consumers to report business who do not give receipts, and have large fines for businesses who still don't. Offer cash rewards to consumers who report businesses that are repeat offenders.
- the_mitsuhiko 11y ago
  Italy does that. You are fined if you cannot show a receipt as a customer. People still want discounts.
  - BuildTheRobots 11y ago
    > You are fined if you cannot show a receipt as a customer. Italy fines the customer rather than the shop keeper, or did I misunderstand what you said?
- st3v3ndungan 11y ago
  > if the people have the will to demand it I think Mitch Hedberg put it best: I give you a dollar, you give me a donut. End of transaction. What's a consumer's interest in asking for a receipt? Especially when you can get a discount instead?
  - toomuchtodo 11y ago
    > require receipts for all transactions, allow consumers to report business who do not give receipts You incentivize compliance through monetary awards for reporting offenders.
    - st3v3ndungan 11y ago
      So I guess I'm curious about how Italy's system works then? It's an empirical question, how much money would I have to be offered to turn on a system of convenience and perhaps monetary discounts? (I'm not considering the downside of off the book transactions as a consumer, I realize).
bluedino 11y ago
That's not uncommon in the USA either. Restaurants, salons, convenience stores. All businesses that deal with a lot of cash and you can easily hide income from.
mseebach 11y ago
You can't have "privacy, but". Either you have privacy and accept that sometimes, some people are going to use that privacy to commit crimes (such as dodging taxes), or you don't have privacy. If there can be an exception to privacy because tax, then there can also be an exception to privacy because terrorism.
- sametmax 11y ago
  Yes. But our society have had so much freedom for so long they can't imagine that they need to make an active effort so that it remains that way. It's not limited to freedom. Ecology is the same. Resource managment is the same. Weigh loss is the same. When one is quite ok right now and that he/she needs to spend energy and think, and take responsability, for what's going to happen way later, it's rarely done. So "privacy but" are going to win. Because it takes thinking and effort to fight it. And what for? Righ now, i'm alrigh.
belorn 11y ago
Lets put that theory to the test, lets imagine a world where each transaction is added to companies and private citizens total tax record, and then all details are imminently deleted. At the end of the day, you get the same total sums as if you had all the individual transactions, but you can't derive any additional information. Would this be an acceptable deal for introducing a cashless society? My conclusions is that the banks would not accept it, and the government would not accept it. By default, cash would thus continue. Banks would not accept this deal, as they need the customer data for data analyzes and market research. It is also a resource to be sold in some places or to be "shared" by "partners" like insurance companies and marketing firms. Government would not accept it, since if the tax department get this then a dozen other department also want it. Police, secret police, and prosecutors want to dig for dirt, and has a long history of ignoring anything that would benefit a defense. Social security want to dig through it in order to skip doing a real assessment of a person (having dept is a good sign, and a buffer is a sign that the person should be denied help). Political parties and political research wants to analyze it and draw conclusions without having to talk to people and do polls. I do not want someone else to analyze my transaction, and if they have to, I want safeguards that prevent incorrect conclusions to be drawn. As it stand, there isn't any, and its barely even recognized that I am a stake holder with any rights over the data.
PythonicAlpha 11y ago
That are mostly the smaller companies (at least in Germany). The bigger corporations also avoid taxes, but the legal way and with electronic transactions. First politics should do something about this!
LordKano 11y ago
When this kind of tax evasion becomes widespread, that should be a clear indicator that the tax rate is too high. In a cashless society, it becomes possible (if not inevitable) the enforcement of that taxation will become even more onerous. $20 from grandma for your birthday? Gift tax. You and your co-workers decide to split a large lunch? Temporary incorporation tax. Your friend buys a 50 pack of DVD-Rs and you split them by reimbursing him half of the cost? Sales tax, again. Sell an old comic book to a friend for more money than you paid for it? Capital gains tax. Cash acts as an inhibitor to the impulse to tax everything or to tax it too greatly. It's understood that if you make a tax too burdensome, people will avoid and evade it.
- silvestrov 11y ago
  > tax rate is too high It's not that simple. Scandinavia has a higher tax rate than Italy (and Russia), but much less tax evasion.
  - LordKano 11y ago
    "Too high" is not an objective measure. If the people of Scandinavia feel that what they're getting in return is worth it, they'll pay the taxes. People in Scandinavian countries have a higher amount of trust in their governments too. I'm sure that has a lot to with it. Someone who believes that their tax money is going to be used for the legitimate(In his or her mind) needs of society has a greater incentive to pay them than the person who believes that their tax money is going to be used to pay kickbacks to the political allies of the people in charge.
    - tamana 11y ago
      That's wishful thinking. It's really matter of how the culture has evolved.
    - ChuckMcM 11y ago
      Exactly this, trust. People give money to churches willingly when they trust the Church will use those funds to do good work. People pay taxes willingly when they see that they are being spent on things that help the community. When that trust erodes, through government sinecures and throwing too much money at a brother-in-law's construction firm to build infrastructure, etc. Then people are unwilling to fund that activity and limit their tax payments as much as they can. And when they really lose faith as they did in Greece it seems, well not paying taxes seems to be more common than paying taxes and the whole thing breaks down.
a3n 11y ago
And what about people who are only paid under the table, and the people who employ them? I'm thinking of day laborers. Regardless of anyone's legal circumstance they need to eat; under the table work serves as a safety net, regardless of the tax issues.
Wonderdonkey 11y ago
It seems to me the most unscrupulous businesses in the United States all do their business by the books. No need to fudge it by failing to declare revenue. They just don't pay taxes, and it's all legal. Cash businesses here do exist. My mechanic only takes cash, and he's a lot cheaper (and, incidentally, better and more honest with his customers) than other mechanics I've dealt with. I wonder how the IRS deals with that. I know that with people who get tips (waiters, hairdressers, etc.) they assume a certain percentage of income from cash tips.
yason 11y ago
Skipping taxes and using cash is only a problem if it's too widespread and the government really has genuine trouble collecting money even for the most basic needs of the society. Luckily, using cash to evade taxes is practically only possible for small entrepreneurs who can manage maintaining both the real income flow and the official income flow, and these people are also those who benefit from it the most. It's the big businesses who practically need to log all sales and transactions by the book. Companies which have lots of employees and locations can't possibly maintain such double books in practice, not to mention keep it secret. (They can try smart "tax planning" via remote jurisdictions and tax havens though, which on the other hand isn't generally available for the local entrepreneurs.) However, if you buy a lunch or pay your barber with cash, is it right that he gets your cash and the government gets nothing? Wrong. The minute the bistro owner or barber goes buy food from a chain store or fills up at the petrol station, VAT and other taxes will be paid and the money will re-enter the official circulation. At best the money will bounce a few times between a few local entrepreneurs until it eventually becomes taxed again. How much effort is worth spending trying to chase these pennies? What if efficient taxation reduces the amount of transactions? This happens all the time, and then both the tax man and the entrepreneurs lose. What if all that unaccounted local cash flow actually lubricates the economy, making better and more efficient use of money, and thus generates larger total taxable flow of money? The percentage of untaxed cash flow also serves as an indicator of how aligned people are with the government taxation level. If people are willing to make lengthy efforts to avoid taxes repeatedly, then maybe taxes are too high. If they only do it when it's convenient or for local shops, then maybe everything is close to fine. It's not so black and white whether it's a "huge cost for society" as it's also "beneficial to society". The question is about trade-offs which need to be balanced, not overruled.
- SilasX 11y ago
  The downside is not simply in the value of the missed taxes; it's the fact that the best business is now determined by tax evasion capability. Instead of "the most dominant market players are the ones with the best products", we get "the most dominant market players are the ones who have some combined aptitude in product value and tax evasion". That is, some resources are wastefully diverted to tax evasion instead of to making better products. A smart dude who could have been working towards self driving cars is instead finding ever-cleverer ways to hide money or game the tax code.
prophet_ 11y ago
I don't think we have to go that far south to see these things happening. Here in Amsterdam the other day went to pick up the car from the garage I was amazed when the guy told me that I had to fork out 700 EUR cash only. In Brazil this practice is also pretty common. The more untrustworthy/incompetent/reckless the government is handling taxpayers' money, the more often one sees this kind of behaviour.
randyrand 11y ago
> has a huge cost for society Has a huge cost for the government, yes, but whether or not its a cost to society depends on the marginal benefit of the government having that dollar, vs the marginal benefit of keeping that dollar in public hands. A corrupt government would be the extreme case of where that dollar is likely best kept from the tax man, but this is far from exclusive to corrupt governments.
scrupulusalbion 11y ago
Why is this phenomena a cost to society? By this phenomena, real prices are able to decrease, with all the concomitant benefits of having reduced expenses.
- iofj 11y ago
  Almost all Euro govts have >100% of their country's total revenue in debt. If prices were to go down, they're completely screwed. If prices go down because you starve the government's income ... that's incredibly bad for them. (when prices go down you have to pay a bigger percentage of your income to serve the same debt)

by carlob 11y ago

agentgt 11y ago

This is exactly what happened to Greece (my in-laws are Greek). Greeks and Greek Americans are completely cash based. Consequently the government has no idea how wealthy its residents are and tax evasion is extremely rampant. I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact.

kamaal 11y ago
>>I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact. These sort of problems run quite deep and have unintended consequences. If money is not traceable, you also give way accountability. Opening up a door for corruption to happen easily, unchecked and unaccounted for. Rinse - Repeat for some time and you will see there are new problems due to corruption, which breed other new problems and so on..

majewsky 11y ago

So what is it then that makes this kind of fraud common in Southern Europe but practically nonexistent in Germany? (judging from my experience)

pjc50 11y ago
It's that nebulous thing called "cultural factors". There are two stable equilibrium points in a society, one where most people play by the rules most of the time and one where most people ignore the rules most of the time. It's quite difficult to shift from the latter to the former; it seems to be historically associated with Protestantism, which itself could be seen as a movement to ""clean up"" religion from corruption.
kingmanaz 11y ago
Read Tacitus' writings on Germania. While the Mediterranean and Near Eastern peoples were issuing violently long-winded, and ultimately hollow, discourses on the subject of ethics, Northern peoples were holding to faithfully monogamous marriages and living in small communities in comparative peace. What the Southern peoples preached the Northern peoples lived.
- nickik 11y ago
  Yeah lets look back to a 2000 year old mistly fantasy document that romans used to moralise their own society for our own explaitions. That seems like a great idea. Its not like that line of thought ever had bad consequences.
  - hguant 11y ago
    I'm going to treat this like a real comment instead of a sarcastic quip. The reason we go back to '2000 year old [not sure if 'misty' or 'mostly', both work in interestingly different ways] fantasy document[s]' is because there are universal truths about the human condition. The value of a statement is not in its newness or its antiquity; it lies in the truth of the thing being said. Brashly rejecting an idea because it is old has the same merit as rejecting an idea because it came from a woman - that is to say, none.

studentrob 11y ago

Taiwan is mostly cash and they use a receipt lottery to encourage people to buy from vendors who give receipts. Each receipt has a number and there's a lottery at the end of the month with cash prizes. Also, people here know they can report a business for not giving out receipts. They might get a share of recovered taxes for that. I don't know all the pros and cons of that setup but it seems there are ways to maintain a cash based system and still collect taxes.

kyrra 11y ago
China has something similar as well, called the Fapiao: http://www.china-briefing.com/news/2013/08/13/understanding-chinas-fapiao-invoice-system.html http://www.china-briefing.com/news/2013/08/13/understanding-... Though as I understand it, it requires a dot matrix printer to populate these receipts (or writing them by hand).
- studentrob 11y ago
  Hmm I don't remember receiving many receipts in China. I spent 3 months there over two occasions a couple years ago. Taiwan's implementation appears more successful to me. Fapiao means receipt, so that makes sense. There is some required hardware or software but doesn't seem any more cumbersome than a credit card machine and printer. Nearly every shop has them in TW. Edit: reading further I see China is rolling out their lottery in more areas the last few years
  - SimpleMinds 11y ago
    That's because you have to actively ask for it. If you don't, they never (almost) give it to you, as business buy those fapiaos from gov. We asked for them quite often and they gave them each time. Total, we won 2 cans of Coke and maybe 10 yuan :) Fun fact - fapiaos you get might be fake. Once I got fake fapiao, printed from fake printer, in fake taxi. I know it's fake because I tried to validate it online (there's service for that) after I noticed I got fake bill :/
    - 11y ago

kamaal 11y ago

>>let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe. Any where, where there are cash transactions this is an issue. In India, apart from salaried people taxed at source almost anybody else rarely if ever pays taxes. Its assumed taxes are only what stupid people pay. And since they make up for a huge vote bank, any move to introduce reforms for cashless payments are resisted. Plus contribution to political parties happens in cash so politicians themselves don't want it. This leads to a situation where the tax burden is expected to be endlessly on the salaried middle class and they are expected to pay up unfairly all the time. Privacy aside, the true reason is people just don't want to pay taxes.

ska 11y ago
Mostly I think that peoples support for paying taxes is proportional to the perceived value they receive from them, and how fairly they are being applied (c.f. Denmark vs. USA - and note that "perceived" is important, and subject to manipulation) I don't know the details, but plausibly could you argue that India's real problem lies in government inefficiency and/or corruption?
- kamaal 11y ago
  >>plausibly could you argue that India's real problem lies in government inefficiency and/or corruption? Your are assuming corruption is an phenomenon that is generated in total isolation without other factors contributing to it. Both government inefficiency and corruption have roots in lack of accountability.
  - ska 11y ago
    I suspect you can chase the turtles down quite a ways - and I already specified I don't know the details. It wasn't really about India but about the idea that people somehow inherently dislike paying taxes, rather than feel like they are getting ripped off when paying them. It's a complex issue regardless of the country and culture.

borispavlovic 11y ago

There will always be ways to evade taxes and the problem with Italy, Greece and other southern societies is not technical but a weak government which can't impose the already existing laws to their citizens, public workers and politicians themselves. Going cashless is not an excuse for an incompetent tax office and Ministry of Finance.

lmm 11y ago
There will always be ways to evade taxes, but the harder we make it the less tax evasion there will be.
- AnthonyMouse 11y ago
  You could also say "there will always be crime, but the harder we make it the less there will be." Technically true but useless for evaluating the cost/benefit of any specific proposal. If the question is, is it worth pervasive mass surveillance, the answer is no.
sametmax 11y ago
I don't know for Italy, but in France, you litteraly can't start most business without doing 20% of your money off black market. Once you are big enough, it gets easier and you can go full legal, but to start, it's terrible.

spystath 11y ago

Exactly the same thing happens in Greece. It used to be very common for shop-owners to "forget" to give you the receipt. After the crisis broke up though people are way more likely to ask for receipts as there are some incentives to do so (minor tax cuts for a specific amount of receipts etc.). Credit/debit card transactions have also tripled since 2008 or so which is good I guess. Things are different with doctors, lawyers etc. though, since virtually noone accepts cards and sometimes you might even need to argue with them to actually print you one. Thus you have some ridiculous incidents of doctors with apparent annual income of 9000 euros which is ridiculously low even for lower class standards. It's getting better, but it's a whole culture that needs to change for these incidents to cease. People using credit/debit cards is a step to the correct direction. In our case a cashless world might even be good.

adamc 11y ago
Does the government not prosecute obvious cases of tax evasion (9000 euros example)? That's what would likely happen in the U.S.
- spystath 11y ago
  It should but it doesn't (or didn't). Up to recently there was practically no investigation on such cases and tax evasion on such circles was rampant. You drive a BMW, run a private clinic in an expensive area in Athens and your annual income is 10k euros. That's OK, I mean why would you lie to me? OK, I'm probably exaggerating but you get an idea. Since 2013 or so there is some effort to audit professionals with such declared incomes but it is practically impossible to check a backlog of 20+ years of cases especially with the glacial pace that the revenue services move.

clarkmoody 11y ago

> cost for society You meant "cost for government," right? It sounds like the slice of society that gets the cash discount is benefiting greatly from this "hidden economy." Saving 50% on a venue is a big win for the newlywed's pocketbook, leaving more money in their pocket to buy goods for their new household.

zzalpha 11y ago
True. If you don't believe the government has any role to play in, say, paving roads, maintaining bridges, etc, then there's no "cost for society". Well, until the bridges start falling down, anyway...
- clarkmoody 11y ago
  Ah, the tried-and-true roads & bridges argument. No, I don't believe the government is necessary to do those things. But if you look at actual government spending, these sorts of infrastructure projects are dwarfed by things like military spending, which could use a reduction.
  - pc86 11y ago
    Let's keep in mind we're talking about Italy here. So the knee-jerk "BUT DRONES" response is probably less accurate than if we were talking about the US or the UK or something.
    - mseebach 11y ago
      Yes, let's indeed keep in mind that we're talking about Italy here. http://www.voxeu.org/article/public-sector-inefficiency-and-firm-productivity-italy http://www.voxeu.org/article/public-sector-inefficiency-and-...
  - deleted 11y ago
    [deleted]
  - rsync 11y ago

fweespee_ch 11y ago

> Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and often when you visit a doctor they'll say: do you want the invoice or a discount? 1) Require receipts for all transactions. 2) Offer 10% of recovered cash for anyone you report who doesn't follow #1. Add the penalty on top of any recovery [e.g. Current Fines + 10%] 3) https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf 4) Taiwan-style receipt lottery [ http://www.tealit.com/article_categories.php?section=living&article=lottery http://www.tealit.com/article_categories.php?section=living&... ]

andrepd 11y ago
Portugal has implemented 4) a couple years ago.

pc86 11y ago

There's a super easy fix for that, if the people have the will to demand it: require receipts for all transactions, allow consumers to report business who do not give receipts, and have large fines for businesses who still don't. Offer cash rewards to consumers who report businesses that are repeat offenders.

the_mitsuhiko 11y ago
Italy does that. You are fined if you cannot show a receipt as a customer. People still want discounts.
- BuildTheRobots 11y ago
  > You are fined if you cannot show a receipt as a customer. Italy fines the customer rather than the shop keeper, or did I misunderstand what you said?
st3v3ndungan 11y ago
> if the people have the will to demand it I think Mitch Hedberg put it best: I give you a dollar, you give me a donut. End of transaction. What's a consumer's interest in asking for a receipt? Especially when you can get a discount instead?
- toomuchtodo 11y ago
  > require receipts for all transactions, allow consumers to report business who do not give receipts You incentivize compliance through monetary awards for reporting offenders.
  - st3v3ndungan 11y ago
    So I guess I'm curious about how Italy's system works then? It's an empirical question, how much money would I have to be offered to turn on a system of convenience and perhaps monetary discounts? (I'm not considering the downside of off the book transactions as a consumer, I realize).

bluedino 11y ago

That's not uncommon in the USA either. Restaurants, salons, convenience stores. All businesses that deal with a lot of cash and you can easily hide income from.

mseebach 11y ago

You can't have "privacy, but". Either you have privacy and accept that sometimes, some people are going to use that privacy to commit crimes (such as dodging taxes), or you don't have privacy. If there can be an exception to privacy because tax, then there can also be an exception to privacy because terrorism.

sametmax 11y ago
Yes. But our society have had so much freedom for so long they can't imagine that they need to make an active effort so that it remains that way. It's not limited to freedom. Ecology is the same. Resource managment is the same. Weigh loss is the same. When one is quite ok right now and that he/she needs to spend energy and think, and take responsability, for what's going to happen way later, it's rarely done. So "privacy but" are going to win. Because it takes thinking and effort to fight it. And what for? Righ now, i'm alrigh.

belorn 11y ago

Lets put that theory to the test, lets imagine a world where each transaction is added to companies and private citizens total tax record, and then all details are imminently deleted. At the end of the day, you get the same total sums as if you had all the individual transactions, but you can't derive any additional information. Would this be an acceptable deal for introducing a cashless society? My conclusions is that the banks would not accept it, and the government would not accept it. By default, cash would thus continue. Banks would not accept this deal, as they need the customer data for data analyzes and market research. It is also a resource to be sold in some places or to be "shared" by "partners" like insurance companies and marketing firms. Government would not accept it, since if the tax department get this then a dozen other department also want it. Police, secret police, and prosecutors want to dig for dirt, and has a long history of ignoring anything that would benefit a defense. Social security want to dig through it in order to skip doing a real assessment of a person (having dept is a good sign, and a buffer is a sign that the person should be denied help). Political parties and political research wants to analyze it and draw conclusions without having to talk to people and do polls. I do not want someone else to analyze my transaction, and if they have to, I want safeguards that prevent incorrect conclusions to be drawn. As it stand, there isn't any, and its barely even recognized that I am a stake holder with any rights over the data.

PythonicAlpha 11y ago

That are mostly the smaller companies (at least in Germany). The bigger corporations also avoid taxes, but the legal way and with electronic transactions. First politics should do something about this!

LordKano 11y ago

When this kind of tax evasion becomes widespread, that should be a clear indicator that the tax rate is too high. In a cashless society, it becomes possible (if not inevitable) the enforcement of that taxation will become even more onerous. $20 from grandma for your birthday? Gift tax. You and your co-workers decide to split a large lunch? Temporary incorporation tax. Your friend buys a 50 pack of DVD-Rs and you split them by reimbursing him half of the cost? Sales tax, again. Sell an old comic book to a friend for more money than you paid for it? Capital gains tax. Cash acts as an inhibitor to the impulse to tax everything or to tax it too greatly. It's understood that if you make a tax too burdensome, people will avoid and evade it.

silvestrov 11y ago
> tax rate is too high It's not that simple. Scandinavia has a higher tax rate than Italy (and Russia), but much less tax evasion.
- LordKano 11y ago
  "Too high" is not an objective measure. If the people of Scandinavia feel that what they're getting in return is worth it, they'll pay the taxes. People in Scandinavian countries have a higher amount of trust in their governments too. I'm sure that has a lot to with it. Someone who believes that their tax money is going to be used for the legitimate(In his or her mind) needs of society has a greater incentive to pay them than the person who believes that their tax money is going to be used to pay kickbacks to the political allies of the people in charge.
  - tamana 11y ago
    That's wishful thinking. It's really matter of how the culture has evolved.
  - ChuckMcM 11y ago
    Exactly this, trust. People give money to churches willingly when they trust the Church will use those funds to do good work. People pay taxes willingly when they see that they are being spent on things that help the community. When that trust erodes, through government sinecures and throwing too much money at a brother-in-law's construction firm to build infrastructure, etc. Then people are unwilling to fund that activity and limit their tax payments as much as they can. And when they really lose faith as they did in Greece it seems, well not paying taxes seems to be more common than paying taxes and the whole thing breaks down.

a3n 11y ago

And what about people who are only paid under the table, and the people who employ them? I'm thinking of day laborers. Regardless of anyone's legal circumstance they need to eat; under the table work serves as a safety net, regardless of the tax issues.

Wonderdonkey 11y ago

It seems to me the most unscrupulous businesses in the United States all do their business by the books. No need to fudge it by failing to declare revenue. They just don't pay taxes, and it's all legal. Cash businesses here do exist. My mechanic only takes cash, and he's a lot cheaper (and, incidentally, better and more honest with his customers) than other mechanics I've dealt with. I wonder how the IRS deals with that. I know that with people who get tips (waiters, hairdressers, etc.) they assume a certain percentage of income from cash tips.

yason 11y ago

Skipping taxes and using cash is only a problem if it's too widespread and the government really has genuine trouble collecting money even for the most basic needs of the society. Luckily, using cash to evade taxes is practically only possible for small entrepreneurs who can manage maintaining both the real income flow and the official income flow, and these people are also those who benefit from it the most. It's the big businesses who practically need to log all sales and transactions by the book. Companies which have lots of employees and locations can't possibly maintain such double books in practice, not to mention keep it secret. (They can try smart "tax planning" via remote jurisdictions and tax havens though, which on the other hand isn't generally available for the local entrepreneurs.) However, if you buy a lunch or pay your barber with cash, is it right that he gets your cash and the government gets nothing? Wrong. The minute the bistro owner or barber goes buy food from a chain store or fills up at the petrol station, VAT and other taxes will be paid and the money will re-enter the official circulation. At best the money will bounce a few times between a few local entrepreneurs until it eventually becomes taxed again. How much effort is worth spending trying to chase these pennies? What if efficient taxation reduces the amount of transactions? This happens all the time, and then both the tax man and the entrepreneurs lose. What if all that unaccounted local cash flow actually lubricates the economy, making better and more efficient use of money, and thus generates larger total taxable flow of money? The percentage of untaxed cash flow also serves as an indicator of how aligned people are with the government taxation level. If people are willing to make lengthy efforts to avoid taxes repeatedly, then maybe taxes are too high. If they only do it when it's convenient or for local shops, then maybe everything is close to fine. It's not so black and white whether it's a "huge cost for society" as it's also "beneficial to society". The question is about trade-offs which need to be balanced, not overruled.

SilasX 11y ago
The downside is not simply in the value of the missed taxes; it's the fact that the best business is now determined by tax evasion capability. Instead of "the most dominant market players are the ones with the best products", we get "the most dominant market players are the ones who have some combined aptitude in product value and tax evasion". That is, some resources are wastefully diverted to tax evasion instead of to making better products. A smart dude who could have been working towards self driving cars is instead finding ever-cleverer ways to hide money or game the tax code.

prophet_ 11y ago

I don't think we have to go that far south to see these things happening. Here in Amsterdam the other day went to pick up the car from the garage I was amazed when the guy told me that I had to fork out 700 EUR cash only. In Brazil this practice is also pretty common. The more untrustworthy/incompetent/reckless the government is handling taxpayers' money, the more often one sees this kind of behaviour.

randyrand 11y ago

> has a huge cost for society Has a huge cost for the government, yes, but whether or not its a cost to society depends on the marginal benefit of the government having that dollar, vs the marginal benefit of keeping that dollar in public hands. A corrupt government would be the extreme case of where that dollar is likely best kept from the tax man, but this is far from exclusive to corrupt governments.

scrupulusalbion 11y ago

Why is this phenomena a cost to society? By this phenomena, real prices are able to decrease, with all the concomitant benefits of having reduced expenses.

iofj 11y ago
Almost all Euro govts have >100% of their country's total revenue in debt. If prices were to go down, they're completely screwed. If prices go down because you starve the government's income ... that's incredibly bad for them. (when prices go down you have to pay a bigger percentage of your income to serve the same debt)