Economy

Italy’s Meloni comes under fire for plans to increase cash payments cap. By Stocksak


© Stocksak. FILEPHOTO: A man pays with cash while shopping in Milan (Italy), October 2, 2020. Picture taken October 2, 2020. REUTERS/Flavio Lo Scalzo

By Alvise Armellini

ROME (Stocksak), -Italy’s right-wing government is preparing to raise a cash payment limit, Prime Minister Giorgia Melonsi said Wednesday. The move comes amid opposition claims that it would benefit tax cheats or money launderers.

According to Treasury data, tax dodging has been a problem in Italy for more than 100 billion euro ($100.47 billion) per year. 18.5% of taxes owed were evaded in 2019.

Cash is more difficult than electronic payments to track, making it more likely that it will be used for illegal purposes. Some people find it difficult to accept credit cards, despite the fact that they are required to do so for privacy and freedom.

Meloni stated to the Senate that she would change the cap on cash payments before a vote of confidence. She was standing by a preelection pledge from her rightist bloc.

The League of Junior Coalition Allies, Matteo Salvini, presented earlier a draft bill to increase the cap to 10,000 Euros next year. It currently stands at 2,000 euro and was set to drop to 1,000 next year.

The cap has been adjusted several times since 2010, ranging from 1,000 to 5,00 euros.

Italy was traditionally a cash-based economy in the European Union. However, this trend has changed in recent decades with card payments becoming more popular since the COVID-19 pandemic.

Senator Franco Mirabelli from the centre-left Democratic Party stated that Meloni’s plan would be a “gift” to mafia organisations. “It would encourage (tax) fraud as well as money laundering,” he wrote to Facebook (NASDAQ:).

Giuseppe Conte (former premier and leader of the left-leaning Five Star Movement) also protested.

“We don’t want crime and corruption to be a part of our society. We are more concerned about helping the majority of Italians, the common people. He stated that people who do not have 10,000 euros of cash are unlikely to go about with them.

Meloni claimed that there was “no correlation” between cash payments, the size of the underground economic, and Meloni. “There are countries with no limits and very little (tax) evasion,” Meloni said, referring to Germany.

A Bank of Italy study last year found that raising the threshold to use cash from 1,000 to 3,000 euros in order to boost spending in Italy in 2016 had the side effect of increasing the size of the underground economy.

When Valdis Dombrovskis was asked in Brussels about Italy’s plans, Valdis Dombrovskis Vice President of European Commission said that EU caps currently range between 500 and over 10,000 euros. He also noted that the Commission proposed a limit of 10,000 euros.

He stated at a news conference that he would like to see “smaller payments limits” for cash.

($1 = 0.9980 euros)

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