The eternal fight to tax evasion: my proposal for Italy (aka my two cents)
The eternal problem with fiscal systems is, basically, that there always is someone trying to be “smarter”. Of course, being Italy the home country of science and smart things, “smart” people are well distributed all over the country.
In this post I want to share a couple of thoughts some proposal (along with explaination)
The real problem
Put simply, the real problem is that previous generations of politicians (that strangely enough still live in the italian parliament) used to deal with tax evasion the wrong way: instead of making sure everyone is paying, they asked honest workers to pay for dishonest workers too.
Taken to extreme (that is, keep on doing wrong) this has lead to the Real Problem™: tax rates nowadays are way too high, so high that they make anti-economic for companies to operate in the Italian field and make anti-economic for honest citizens to stay honest.
Previous attempts to solve this problem
In the past, several attempts have been made to encourage people to ask for receipt and avoid black-markets.
Emblematic is the attempt made by the Chinese Government with his Receipt lottery. China has a couple of problems, mainly with tax evasion and corruption. So much similar to Italy that a chinese girl I used to date once said me that Italy is considered European China for it high rate of corruption and tax evasion. So sweet -_-” .
Still, this doesn’t solve the problem entirely, apparently.
The “sub-problem” is basically that we have to way to see what path the money follows.
Someone used to say “Follow the money”. If I recall correctly, Giovanni Falcone used to use this line when explaining his and his colleagues’ way to deal with mafia-related investigations.
It’s actually a great tip.
In computer science, when a program is not working correctly, people in charge of debugging always go and see what path data is following, step by step, in order to determine when things are going wrong.
The concept then is to deal with money in a trackable way.
That is, usage of electronic payments should be encouraged, but not the way electronic payments system actually work at this point in time (William Zinsser is going to spit in my face for using those words).
As said in a previous post, I have been reading Antonio Cangiano’s masterpiece: “Technical Blogging: Turn Your Expertise into a Remarkable Online Presence” (a friend of mine lend me a copy of the book).
When explaining how to get people to sign up to your mailing list he uses a clear and concise concept (I’m quoting him):
If you want an even greater conversion rate, you may have to take things a step further. Don’t just invite people to join your newsletter: bribe them.
The easiest way to attract new subscribers is to offer them something for free when they sign up for your newsletter.
Bribe them. Life is ironic.
As is sair earlier, the good thing about electronic payment is that it makes easy for people to follow the money. In particular for judges.
Electronic payments are put on accounting instantly, there’s no way to escape it.
So, let’s put things together: we have a great tool to fight tax evasion and we need to bribe people into using it. Also, the main thing that slows down expenses are taxes (VAT, italian IVA, in particular)
Are you getting the point?
My proposal is to significantly lower down IVA/VAT for those who pay via electronic payments. Let’s say, instead of 22%, let’s make it 15%.
Also, let’s make it mandatory to accept electronic payments.
Some solutions bring other problems
Before anyone says it, I can see a little forward on this. Technical an philosophical problem arise.
- Not everybody has an internet connection in his/her shop
- Those who are really making big money in this way are banks
- Some jobs require mobility (plumbers, for example)
- It’s TOTALLY UNACCEPTABLE to make private entities like banks control the money system. Money belongs to the state and thus to citizens.
Solution to problem #1: huge investments in the field of telecommunications are needed. By the way, those investments are also needed for other reasons, so we solve two problem in a single step. Also, a british report showd that internet-related workers produce 10% more GDP than other workers. Sadly enough, I can’t find the youtube videos that discusses this topic in my youtube history.
Solution to problem #2: This is simple: banks should be forced by laws to provide very basic services to run a business for free (that is: using electronic payments shouldn’t be more expensive than using real money payments).
Solution to problem #3: cellular-based POSes exists. This isn’t actually a problem, it’s bullshit. The very same way a plumber has to bring a sufficient amount of cash money in order to give back charge, it should also make sure to have its POS ready and fully working (that is, with batteries charged). No pos, no money, and you can’t force an individual to pay in cash if he/she wants to pay electronically (this should be law).
Solution to problem #4: a state-controlled entity should be in charge of providing basic service to everyone wanting to run a business as well as to individuals wanting to pay using electronic payments, no questions asked, no denials. The very same way no one can forbid anyone else to use real money, this entity should provide basic services to anyone for free. If PosteItaliane hadn’t been privatized, then it could have been the right company. This last “solution” is the last but not the least important: the very same way banknotes are just a piece of paper representing value, so should be electronic payments.
Why should this work?
It should work for the very same bribe concept mentioned earlier.
When you’re lowering down taxes, you’re actually making competition to tax evasors.
Also, on not-so-small expenses (100-300€) 5-7% less in taxes can be a nice discount buyers and something interesting for the State (a loss in tax income of only 7% instead of 22%)
Please note that this discounts actually SUMS UP to other discounts made by the seller. Double win.
Actually the idea is very similar (if not totally equal) to the concept of “deducting receipts from taxes”. The real difference is that doing it this way, it’s done in real time (yes, it’s buzzwords time).
Think about it: most successful websites and application are those whose interface is low-friction: it’s very simple and easy to interact with them and most of dirty technical details are hidden from the eyes of casual users. Think of Google with its minimal search box.
As usual, it would be nice to have constructive criticism.