ECONOMY

Plan to dethrone cash as king

plan-to-dethrone-cash-as-king

Alternate Finance Minister Tryfon Alexiadis has said that the government is considering connecting the tax-free threshold to card payments.

The new plan would change the way taxpayers collect evidence toward claiming their annual 9,000-euro tax-free allowance, switching it from paper receipts to debit or credit cards. Banks would then inform the tax authorities of the taxpayer’s annual expenditure. Those who don’t have payment cards may lose their tax-free allowance, though exceptions could be made for taxpayers unable to use such cards.

The previous project developed by the economic team offered a cash refund for transactions over 50 or 70 euros. The measure was put into effect from July 1 on 22 islands, but was abandoned.

The alternate finance minister is processing new designs which he expects to present soon to Finance Minister Euclid Tsakalotos and Deputy Prime Minister Yiannis Dragasakis.

Speaking to Vima FM, Alexiadis said: “We need to consider all motives for all businesses to offer card payment facilities. We must also give incentives to citizens to use the cards and have to see how we are utilizing this entire system both for business and the citizen.”

The experience of capital controls shows that transactions can be moved to an electronic format. From June 27, there was a surge in demand for debit cards, while the issuance of e-banking codes increased fivefold in July.

Denmark has the highest number of card transactions per inhabitant in the European Union. According to European Central Bank data, each Dane carries out an average of 243 electronic transactions a year. Legislation to completely eliminate cash by 2016 is the final step for fully electronic transactions.

By contrast, in Greece, where consumers make on average only seven transactions a year by card, incentives are considered necessary. South Korea has the biggest success story in this area, increasing card transactions from 16 percent to 65 percent within a decade. The motivation of a lottery was successfully tested in Portugal and less successfully in Romania, while in Latin America the return of 5 percent of the transaction value on payments by card is almost universal.