European Commission attacks Italy’s support for cash transactions

[The_King]

The European Commission has warned Italy’s new right-wing government against enacting plans to promote the use of cash, which Brussels said would run counter to Rome’s commitment to fighting tax evasion.

Italian Prime Minister Giorgia Meloni, head of the Conservative Brotherhood in Italy, wants to raise the legal ceiling for cash transactions to 5,000 euros, mirroring a pledge by previous Italian governments to lower the limit from its current level of 2,000 euros to 1,000 euros. Starting January 1, Meloni also wants to give merchants the right to refuse to accept digital payments for transactions of less than €60 without fear of being penalized.

However, in its assessment of Italy’s draft budget plans, the Commission said measures to encourage the use of cash violated economic guidelines. If Meloni’s government follows through on the plans, the Commission said it would constitute a reversal of previous steps by Rome to reduce tax evasion, a condition of receiving 200 billion euros in recovery money from the EU.

The commission said the measures were “not in line” with previous advice to Italy “to combat tax evasion . . . by promoting the compulsory use of electronic payments”.

Meloni’s first budget was seen by the European Union and investors as a test of her commitment to fiscal discipline. Officials in Brussels consider the new government’s spending and deficit-cutting plans prudent. But they worry that cash promotion measures, seen as a populist concession to Meloni’s small business supporters, could reduce tax revenues.

“The total size of the budget is good, and its composition is less than that,” said a senior EU official.

Italian companies are now required to accept digital payments for transactions of any value and can be fined at least €30 for refusing them — a threat that infuriates small business owners.

However, Meloni has already indicated that it may be willing to review its proposals for digital payments. “The €60 threshold is indicative of that – for me it could be even less,” she said in a recent video on social media, following an outcry from critics who called her proposals a step backwards.

She acknowledged that promoting electronic payments is one of the goals of the EU-funded Covid recovery plan, and added, “We’ll see how it turns out.”

Meloni argued that Italy’s current low limits on cash transactions hurt the country compared to other European countries, many of which impose no caps on cash use at all. It also rejected the notion that greater use of cash enables and encourages tax evasion.

“The more I can legally use cash, the less I have to evade using it,” she said in a video posted to social media this week.

Meanwhile, as part of its own efforts to combat money laundering, the European Council proposed this month that the EU impose a cap on cash transactions of €10,000 across the bloc, but the measure has yet to be accepted.

Following the council’s proposal, Italian Infrastructure Minister Matteo Salvini tweeted that the European Council “affirmed the freedom to use one’s money as one pleases” with a proposed cash limit of twice that proposed by Italy.

Italy currently has one of the lowest digital payment rates in the European Union, despite its usage growing by 22 percent in the first half of 2022, compared to the same period last year. The average digital transaction volume in Italy is currently just over €47

 

 

https://chof360.com/european-commission-attacks-italys-support-for-cash-transactions/

[The_King]

already say liao