3 ms·

Ask HN: I have an idea to fight cash-tax evasion, looking for comments

2 points by fvv 7y ago

Good morning everyone, I Have had an Idea That I think has never been implemented by governments to fight cash evasion I'm from Italy and here is a quite big problem [1] This idea also allow to maintain high limits on cash payments to those who still seems to not live without cash.. but to kill 100% -> and I mean really 100% of cash-tax-evasion THE IDEA IS : put an expiration/validation system on cash bills (maybe only those bigger than 1€ ) :: HOW TO DO IT :: 1) - obviously it would not be convenient to throw away the banknotes so the banknotes are "revalidated" in a database of the state that contains the banknote number and the expiry date. 2) - to revalidate the cash just "photograph" ( maybe in future if this works the bills may have a qr code for a better digitalization ) it with an app for smartphones or specially created tools that follow the same principle of scanning and sending that can also be integrated into special counterfeit banknote detectors or go to the bank with banknotes every MAX 2 years for perform the operation at the counter 3) - the payment operators can equip themselves with a machine that validates the cash (which will probably be like a counterfeit money detector but which moreover read the serial number and validate it (send it to the ministerial database) 4) - expired cash is no longer valid, it can be re-enabled only at a bank by presenting identity documents of those who deposit (or could be worth 40% less than the nominal value creating a kind of "forced tax on the black" ( or read *6 ) 5) - during validation (through specific machinery / mobile app / bank counter) the cash is tracked and associated with the validating entity (in this way an operator / private individual will not validate cash for third parties without then declaring it in the balance sheet) 6) .. ( not enough chars, see my comment here below or full : https://pastebin.com/G6WfmxTn )

fvv 7y ago
6) - the "expired" cash is worth 40% less every two years ( so after 4y is worth 0.60.6 and so on ) , and the expiry date cannot be verified (only bank can verify during a deposit ) but only validated during the taking in charge of the banknote during a transaction., only in this way this system work (otherwise a parallel market of expired currency could arise) ... you can build a blockchain around that system if you prefer :) :: PROBLEMS & SOLUTIONS :: 7 ) single-state database would be not enough .. because in Europe there is a single currency shared between more states.. this way new-entry of cash may seems expired.. in this case, however, until the system is implemented at European level it is possible to monitor the flow of "unregistered" cash that a merchant acquires during the activity, and still allow checks on individual cases that become suspect, or the merchant is required to verify the identity card of a foreigner who pays cash in excess of X, everything would still be very effective because the amounts collected in Italy in cash from a foreigner are traced at least in the receiving part and from there on money enters the validation round you can in the case put a limit on the cash-transaction ( credit card is ok ) used for foreign purchases in Italy with "expired" cash which is much more effective and less limiting than putting a low limit on all purchases in cash , this is a quite low limit anyway circulating with large amount cash ( expecially between countries ) is already forbidden and dangerous.. thank you everyone for your comments, [1] https://www.bloomberg.com/news/articles/2019-09-17/italy-weighs-penalty-on-cash-withdrawals-to-fight-tax-evasion https://www.bloomberg.com/news/articles/2019-09-17/italy-wei...
bufferoverflow 7y ago
Many problems. Easily circumvented by switching to something that doesn't automatically lose value: cryptocurrencies / stamps / gold. Or even more trivial - other country's currency. You want ALL cash businesses in the country to buy and install some equipment they don't want to buy, and then train their employees to use it properly. Very expensive proposition to the economy, and very profitable for the manufacturer. That's a recipe for corruption.
- fvv 7y ago
  sure but yours are workaround to evade taxes that already exists and that are already tracked.. I'm not saying that there are no other way to evade taxes.. I'm saying that this way fight the cash-money tax evasion. you can always barter with something and no one will ask VAT over that.. But saying that you can barter doesn't mean that you cannot find a way to fight tax evasion on cash-bills ( also states already fight that in other ways that seems not working anyway ) All business have already the BankNotechecker, all business in italy MUST have by law a POS ( to accept credit cards payments ) this is a new feature that can be applied over a POS or BankNotechecker or I'm saying even a smartphone.. I don't know where the corruption can leverage if the state provide an android app to check&validate banknotes
onion2k 7y ago
Completely reinventing cash using the system described would be several orders of magnitude more expensive than just writing off the tax evasion as a loss. Why bother?
- fvv 7y ago
  why reinventing? every two years if the banknote that is being received during a payment did not undergo a passage in the system in the last two years the system say that this banknote cannot be used in commercial trades but just have to be taken to a bank.. have you an idea how many systems italy have to fight tax evasion ? we also have a system that tell you that based on your company type you should have a given amount of taxes to pay and if you didn't reach that amount the state tell you that you still have to pay taxes anyway because you are lying in your tax declaration.. https://www.agenziaentrate.gov.it/portale/schede/dichiarazioni/isa-2017/modulistica-degli-indici-sintetici-di-affidabilita-2019 https://www.agenziaentrate.gov.it/portale/schede/dichiarazio... so there are methods to fight tax evasion that are MORE AND MORE complicated than a scan of banknotes right now..
- fvv 7y ago
  Maybe I've been not enough clear in my message but the cash is the same what I'm proposing is a small device which will cost like a POS ( which is mandatory ) or even 0 ( ZERO) if used by a phone which allow business to accept CASH-payments which at the moment is a very restricted way of paying here in italy ( try to pay with a 200€ bill in italy and tell me ) and which still cause a huge hole in state income and that they are trying to arginate with very creative solution ( now they are proposing a cashbacks on credit card payments, or even a tax on cash withdrawals ) this way would be 100% more effective on cash-tax-evasion and easier to implement ( will be applied only on 10+€ transactions on cash-transaction which anyway the state is already trying to dissuade as much as possible) the qr code on banknotes is optional.. and maybe will come anyway in future.. banknotes are updated every X years anyway...

2 points by fvv 7y ago

fvv 7y ago

6) - the "expired" cash is worth 40% less every two years ( so after 4y is worth 0.60.6 and so on ) , and the expiry date cannot be verified (only bank can verify during a deposit ) but only validated during the taking in charge of the banknote during a transaction., only in this way this system work (otherwise a parallel market of expired currency could arise) ... you can build a blockchain around that system if you prefer :) :: PROBLEMS & SOLUTIONS :: 7 ) single-state database would be not enough .. because in Europe there is a single currency shared between more states.. this way new-entry of cash may seems expired.. in this case, however, until the system is implemented at European level it is possible to monitor the flow of "unregistered" cash that a merchant acquires during the activity, and still allow checks on individual cases that become suspect, or the merchant is required to verify the identity card of a foreigner who pays cash in excess of X, everything would still be very effective because the amounts collected in Italy in cash from a foreigner are traced at least in the receiving part and from there on money enters the validation round you can in the case put a limit on the cash-transaction ( credit card is ok ) used for foreign purchases in Italy with "expired" cash which is much more effective and less limiting than putting a low limit on all purchases in cash , this is a quite low limit anyway circulating with large amount cash ( expecially between countries ) is already forbidden and dangerous.. thank you everyone for your comments, [1] https://www.bloomberg.com/news/articles/2019-09-17/italy-weighs-penalty-on-cash-withdrawals-to-fight-tax-evasion https://www.bloomberg.com/news/articles/2019-09-17/italy-wei...

bufferoverflow 7y ago

Many problems. Easily circumvented by switching to something that doesn't automatically lose value: cryptocurrencies / stamps / gold. Or even more trivial - other country's currency. You want ALL cash businesses in the country to buy and install some equipment they don't want to buy, and then train their employees to use it properly. Very expensive proposition to the economy, and very profitable for the manufacturer. That's a recipe for corruption.

fvv 7y ago
sure but yours are workaround to evade taxes that already exists and that are already tracked.. I'm not saying that there are no other way to evade taxes.. I'm saying that this way fight the cash-money tax evasion. you can always barter with something and no one will ask VAT over that.. But saying that you can barter doesn't mean that you cannot find a way to fight tax evasion on cash-bills ( also states already fight that in other ways that seems not working anyway ) All business have already the BankNotechecker, all business in italy MUST have by law a POS ( to accept credit cards payments ) this is a new feature that can be applied over a POS or BankNotechecker or I'm saying even a smartphone.. I don't know where the corruption can leverage if the state provide an android app to check&validate banknotes

onion2k 7y ago

Completely reinventing cash using the system described would be several orders of magnitude more expensive than just writing off the tax evasion as a loss. Why bother?

fvv 7y ago
why reinventing? every two years if the banknote that is being received during a payment did not undergo a passage in the system in the last two years the system say that this banknote cannot be used in commercial trades but just have to be taken to a bank.. have you an idea how many systems italy have to fight tax evasion ? we also have a system that tell you that based on your company type you should have a given amount of taxes to pay and if you didn't reach that amount the state tell you that you still have to pay taxes anyway because you are lying in your tax declaration.. https://www.agenziaentrate.gov.it/portale/schede/dichiarazioni/isa-2017/modulistica-degli-indici-sintetici-di-affidabilita-2019 https://www.agenziaentrate.gov.it/portale/schede/dichiarazio... so there are methods to fight tax evasion that are MORE AND MORE complicated than a scan of banknotes right now..
fvv 7y ago
Maybe I've been not enough clear in my message but the cash is the same what I'm proposing is a small device which will cost like a POS ( which is mandatory ) or even 0 ( ZERO) if used by a phone which allow business to accept CASH-payments which at the moment is a very restricted way of paying here in italy ( try to pay with a 200€ bill in italy and tell me ) and which still cause a huge hole in state income and that they are trying to arginate with very creative solution ( now they are proposing a cashbacks on credit card payments, or even a tax on cash withdrawals ) this way would be 100% more effective on cash-tax-evasion and easier to implement ( will be applied only on 10+€ transactions on cash-transaction which anyway the state is already trying to dissuade as much as possible) the qr code on banknotes is optional.. and maybe will come anyway in future.. banknotes are updated every X years anyway...