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19 September 2019 10:04
Italy Considers Penalty on Cash Withdrawals to Fight Tax Evasion
A radical plan to discourage cash payments and reduce runaway tax evasion has some Italians up in arms.
With one of the highest tax rates in Europe, Italy lost 107.5 billion euros ($118.5 billion) to tax dodging and under-reporting in 2016. The country has an evasion rate of about 30%.
The idea: offer consumers tax credits for settling their debts electronically while imposing a penalty on cash withdrawals above a monthly threshold.
Reducing the use of cash and encouraging electronic payments would go a long way toward cutting into an underground economy that accounts for more than 12% of gross domestic product.
Shops, restaurants and other small businesses often refuse electronic payment, citing high costs or broken card-reading equipment. Many fail to report the resulting cash transactions.