Greece to punish taxpayers, if they use “cash”: half-measures create half-solutions

The end of cash money. Or something in this direction.  Although we’ve heard of similar measures in the recent past, this time Greek tax authorities and financial ministry authorities are serious: they will accept only electronic receipts so that taxpayer will build the amount of the expenses needed to enjoy tax-breaks only if the payments are done via credit card -and most probably also via debit cards or via bank transactions. The measure will be imposed of 1. January 2016, while exemptions will be made for those over 75 or 80 years old and for residents on remote areas.

The measure aims to reduce tax evasion conducted by businesses. As tax evasion seems impossible to combat, the Finance Ministry will make non-cash payments obligatory for the consumers.

The Ministry will oblige businesses cash registers to be linked automatically to the General Secretariat of Public Revenues. A similar measure was supposed to be implemented already in 2012 but it went never into force for the usual reasons like “practical problems” which were in fact strong reactions by the business guilds. Talk was also for so-called “smart tax card” that was never smart enough to go into the real Greek life.

Three years later, and the left-led government makes another try. The finance ministry gives in fact obligatory incentives to the taxpayers who will stop collecting the magic papers of receipts.

Greek press reports of the planned tax deductions that will be included in the chapter of “the end of cash” as:

“In order to benefit from the tax free amount of 9.550 euro that leads to a tax return of 2,100 euro taxpayers will have to gather evidence of expenses via electronic transactions.

Taxpayers will be relieved from collecting paper receipts and authorities will be able to cross check business transactions as the credit cards are linked to bank accounts.”

I do not know how the tax authorities will do that in practice and this is not my business to find out. But first of all, the finanance ministry has to clarify if the tax-free amount will be gathered only via credit cards, as the media report, or via credit and debit cards and or bank transactions.

Furthermore, the state has to step forward with a good example and have its tax offices, water and electricity companies and museums/archaeological sites accept payments with credit or debit cards in the local offices. Just to start with.

The Finance Ministry needs to do much more than the above mentioned measure.

a. It needs to accept as expenses monthly costs like electricity, telephone, water, heating oil, transportation tickets, full acceptance of medical expenses – just to name a few. Otherwise, it will keep stirring the pot of tax evasion without effect.

b. The Ministry just have to take into account all those low income taxpayers and or jobless who borrow money from relatives and friends to come along. The Ministry has also to scrap that scandalous “taxation of deemed income” otherwise, the jobless will have to pay extreme taxes because they have no credit cards or even bank accounts.

c. It has to take into consideration all the taxpayers who no access to credit or debit cards or even to a bank account for whatever the reasons.

d. And most important, the FinMinistry has to lift capital controls that prohibit citizens from opening bank accounts.

I am sure there are much more gaps and holes in this new ‘tax-breaks’ system, which right now I cannot think of. Just a friend mentioned one more: that taxpayers will cover the needed amount for tax-breaks with cards and then use cash money, make purchases of goods and services without receipt, gets discounts by businesses for not paying Value Added Tax and …business as usual.

Create a fair taxation system, restore confidence between the state & the citizens. Restore public services, health care, social welfare state. Get rid of the creditors otherwise taxpayers will keep thinking and seeing that all collected taxes go to the creditors and nothing or very very little returns to citizens. This could work. Otherwise, we’ll see again half-measures for half-solutions.

Otherwise,  well… good luck!