ECONOMY

Tax incentives to boost card use

tax-incentives-to-boost-card-use

The Finance Ministry is examining various measures to combat tax evasion through offering consumers incentives to use credit and debit cards. These include extending the tax-free threshold through plastic money transactions and the introduction of prize draws in which card users could, for example, win a home.

The ministry is also examining incentives for businesses, with one idea being to subsidize the cost of installing card terminals through European funds and another being to introduce a reduced tax rate on earnings from sales paid via credit and debit cards.

The above proposals are also being examined by the technical experts of the country’s creditors ahead of the restructuring of the Income Tax Code, and the decisions are expected very soon: It is believed that this is an ideal time to address the issue because the capital controls have resulted in the greater penetration of credit and debit cards and the familiarization of more consumers with their use.

Two alternatives are being considered when it comes to raising consumers’ tax-free level through their paying with plastic: The first concerns the granting of a tax-free threshold only to those who conduct all their transactions through credit or debit cards, while the second provides for a higher threshold for those who use cards. For instance, the existing threshold of 9,550 euros could be raised to reach up to 10,000 or even 11,000 euros per annum for taxpayers who have collected all their receipts through card payments.

The cost of installing 500,000-600,000 card terminals around the country is estimated at about 100 million euros, a sum which could easily be covered by the EU subsidy program. The creditors agree on that, and have called on Athens to make the most of the favorable timing to introduce incentives to ease the transition to electronic transactions, seen as the most effective way to contain tax evasion.

An additional incentive could be the reduction of the earnings tax rate from 29 percent to 25 percent, for instance, for transactions conducted electronically.