ITE – IOBE: Encourage Consumers to Use Plastic Money

The ceiling has hit the use of plastic currency in Greece, and many fear that a gradual lifting of capital controls can have serious negative consequences on the economy, particularly revenues. VAT and tax revenue

. High taxation forces many entrepreneurs to try to conceal as much revenue as possible in order to avoid taxes and levies. On the other hand, the lack of incentives for consumers to use plastic currency while lowering prices in case they pay cash and without evidence creates favorable conditions for tax evasion

. would be disastrous if no immediate action is taken. In this case, it is possible to increase only by collecting VAT of 3.3 billion years, as long as the value of card transactions as a percentage of private consumption is 20.1% today. 39; hui

Study of the Foundation for Economic and Industrial Research (IOBE), entitled "Electronic Payments After Capital Restrictions: Aid Measures and Tax Revenue", records the benefits of emerged for the 39 Greek economy a tax rate of the increased use of electronic payment instruments for the period 2015-2017, presents the potential benefits of increased use of "plastic money" and formulates policy proposals to encourage an increase in the use of credit and debit cards

The IOBE study was published following the mid-term monetary policy report of the Bank of Greece stressing that Greek economy remains at top of the EU economies households mainly use cash in their transactions and warned that if controls on capital movements and banking restrictions gradually relax while keeping taxation at a very high level, the risk to reverse the trend in the use of electronic transactions

Monetary plastics and VAT
The figures of the IOBE show that the use of plastic currency "does" the recipes VAT. The study argues that any 1% increase in the share of cards in private consumption leads to a 1.4% increase in VAT revenues. In general, annual VAT revenues increased by almost 1/5 and about 2 billion in two years between 2015 and 2017, while the value of card transactions as a percentage of private consumption more than tripled over the past year. same period. But card penetration also has a positive impact on tax compliance. According to IOBE, each 1% increase in the penetration of value and number of card transactions, not due to macroeconomic or fiscal developments, led to an increase of 0.26% and 0.19% respectively.

and Industrial Research – confirming the reports of the Bank of Greece – stresses in its study that the level of payment cards in Greece remains relatively low, which creates opportunities to further improve VAT revenues through compliance tax. On this issue, IOBE conducted simulations showing what would be the advantage for VAT revenues if Greece managed to increase the level of use of the cards. As the IOBE says, if the share of the cards of private use in Greece reaches the average level of use of the cards of the EU, the annual revenues of the VAT will increase by 21% or 3.3 billion euros. If Greece reached the level of use of the maps of Portugal, the annual VAT revenues would increase by 54% or 8.5 billion euros

Incentives for the use of the cards
On this basis, the IOBE proposes As an indication, it proposes to reintroduce the deduction of medical expenses from the income tax if they are paid by card, the introduction of a deduction of income tax. with the amount of transactions that they make households with cards when they exceed a minimum percentage of transactions, but also incentives for consumers to abandon businesses that have not declared a business account or who do not accept card payments (even if there is a POS but repeatedly technical problem ")

IOBE considers that the existing system of public lotteries per month is the same context, it proposes to return a percentage, eg 5% of the value of card transactions (discounted or cash back) in sectors targeted for moderate to high risk tax evasion or to determine a maximum amount of reimbursement per household, eg Finally, IOBE notes that it would be useful to seek to discourage online payments for purchases in online, in order to create a bizarre bank account for highly indebted companies who prefer to receive their cash transactions in order to avoid automatic freezing of funds deposited electronically but also to apply the electronic billing system to large scale

SOURCE: newsit.gr