What did I tell you! This is probably very much in the cards. Will Make the black market almost fully compliant without having to do too much tinkering. All these modern gadgets make it easier to achieve this paperless footprint to commercial and business transactions.

Mo Money, Mo Problems

How eliminating paper money could end recessions.

By Matthew Yglesias|Posted Monday, Dec. 12, 2011, at 3:28 PM ET
Cash

Cash: What's it good for, anyhow?

Photograph by iStockphoto/Thinkstock.

A little-noticed tidbit in the ongoing European budget negotiations is Italy plans to ban the use of cash for transactions over 1,000 euros. Italy wants to cut down on tax evasion, but we should hope that other countries start to realize the enormous economic benefit of ditching cash.

Already, a movie character depicted as carrying a large quantity of cash can be reliably assumed to be doing something illegal. Meanwhile, the rise of phone-based mobile payments services such as Square and the emergence of a complete mobile banking industry in Africa point to the arrival of the day germ-ridden cash will be as inconvenient for small transactions as it is for large ones. At that point, cash will be left with its rump use as a medium of exchange for drug dealers, tax evaders, and other shady operators and we can expect countries to start banning it altogether. The first country to impose that ban will find there’s an appealing hidden benefit: Without cash, there’s no need to ever have an extended recession.

Why would a cashless society be a depression-less society? Starting about 40 years ago, it became clear that central banks had the power to end most recessions pretty easily, independent of fiscal stimulus. If your economy is saddled with idle resources—unemployed workers, vacant office spaces, factories that aren’t running all their shifts, trucks cruising down highways half-empty—what you need to do is increase the flow of spending through the economy. You do that by cutting interest rates. When rates fall, business investment, homebuilding, and durable goods purchases all rise and next thing you know everybody’s back to work. That’s how the American economy worked from the mid-1970s until 2008, and there wasn’t much more to say about it. When recession comes, cut interest rates, and growth restarts. Economists could happily move on to more interesting topics, such as: How do countries get rich rather than simply escape recession?
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But there is a problem with this simple recession-fighting formula. The number zero.

As Paul Krugman wrote in a 1999 Slate column about Japan’s decadelong depression, “whereas U.S. interest rates in early 1982 were in double digits—and could therefore be sharply reduced—Japanese short-term interest rates have been below 1 percent for years, apparently leaving little room for further cuts.” Japan couldn’t reduce interest rates to spur economic activity, because interest rates couldn’t fall below zero.

Today, the United States is in the same boat. That doesn’t mean there’s nothing a central bank can do to fight a recession, but it does mean the standard formula of simple rate cuts won’t work.

Now we come to the miracle of the cashless society. Stop for a moment and ask yourself why the interest rate can’t be reduced much below 1 percent. The trouble is cash. At any given time, relatively little paper currency circulates in the United States. Instead, most of the American money supply consists of bank accounts and other electronic stores of value. People prefer to keep money in bank accounts because it’s convenient and because you get interest on it. If the rates were driven below zero—in effect a tax on holding cash in the bank—people would just withdraw money and store it in shoeboxes instead. But what if you couldn’t withdraw cash? What if all transactions were electronic, so the only way to avoid keeping money in a negative-rate account was to go out and buy something with the money? Well, then, we would have solved our depression problem. Too much unemployment? Lower interest rates below zero, Americans will start spending and investing again, the economic will grow, and unemployment will go back down to its “natural rate.”

Some people could, it’s true, try to horde gold, diamonds, or other valuable primary commodities. But this would amount to a price boom, creating mining and exploration jobs. It would also increase the wealth of everyone who already owns jewelry, expanding their consumption. The savvy investor, meanwhile, will realize that the price of gold is sure to crash when the recession ends and interest rates go back up, which should put a break on hoarding.

So is all hope of stopping recessions lost as long as we’re saddled with cash? Not necessarily. Fiscal policy and efforts to boost future expectations of inflation can have a similar impact: Higher inflation in the future is more or less equivalent to a negative interest rate. Berkley economist Brad DeLong proposes a Rube Goldberg scheme to combine a negative nominal interest rate with sporadic lotteries that would invalidate currency with certain serial numbers. The idea is that while people might try to stockpile cash, the knowledge that bills would be destroyed at random should inspire people to spend. But boosting inflation or randomly invalidating currency are bizarre and unpalatable proposals for the economic and political elite. Scrapping cash, on the other hand, is simple and elegant, which is why it will happen some day soon.

Italy Is Taking A Draconian New Measure To Avoid Tax Evasion

Joe Weisenthal|December 04, 2011|


Italy has unveiled brand new austerity measures in a bid to win back confidence, and the support of its European peers.

One measure that's raising a lot of eyebrows: All cash transactions over 1000 euros will now be banned outright.

The idea is that it's a bid to cut down on tax evasion.

What's interesting is that previously they banned cash transactions over 5000 euros. Evidently that didn't work.

Overall, according to Reuters, the austerity measures -- which include a heightened retirement age -- are designed to cut about 20 billion EUR from the deficit.

Read more: http://articles.businessinsider.com/2011-12-04/markets/30473983_1_tax-evasion-austerity-measures-retirement-age#ixzz1gQbhVz1v

One European Country With More Tax Evasion Than Italy

Alex Roe|November 28, 2011|


Protesters carry a mock coffin representing Italy's debt during a protest against austerity cuts

Protesters carry a mock coffin representing Italy's debt during… (Christopher Furlong / Getty)

Tax evasion is a problem which costs Italy around €180 billion a year. One of the reasons some employers in Italy give for not paying taxes is how much it costs to employ people.

Does it really cost so much to employ people in Italy? I decided to do some digging and find out.

Here are figures based on data published by Eurostat, the statistics arm of the European Commission on labour costs, as well as information on tax evasion in Italy, the UK, Germany, France, and Denmark.


The figures reference 2004 and 2008 and appear to indicate that Italians who claim labour costs in Italy are excessive simply do not realize how their nation measures up in comparison to other major European nations. Do you think the figures justify tax evasion which is 30% higher per head than in other major European nations?

It seems Italy’s former Prime Minister Silvio Berlusconi did not know much about the real situation and in 2004 appeared to believe that there was nothing wrong with Italians evading taxes in the event the tax burden exceeded 50%. He even hinted that it was their moral duty to evade taxes. As you will probably know, Silvio Berlusconi is no longer Italy’s Prime Minister.

At 43.1% the tax burden is high in Italy, but it is not excessively so when compared to other countries in Europe.

Back to the cost of employing people in Italy. Research carried out at European level by Eurostat does not appear to support the contention that the cost of employing people in Italy is so incredibly high as to justify massive tax evasion.

Is it true that the cost of employing people in Italy is significantly higher than in other areas of Europe? The answer is “No, not really”, as the data below shows:

Hourly labour cost comparison, EUR, 2004 and 2008

Data refer to enterprises with 10 employees or more excluding apprentices

Data from Denmark and Bulgaria included for reference purposes.

Bulgaria has the lowest labour costs in the European union and Denmark has one of the highest tax burdens in Europe at 49%.

Italy

22.81

24.86

2.05

9

UK

21.62

21.22

-0.4

-1.9

France

28.67

32.19

3.52

12.3

Germany

27.76

29.34

1.58

5.7

Denmark

31.44

36.11

4.97

16

Bulgaria

1.61

2.54

0.93

57.8

What about employer contributions? Well, they are not low in Italy, nor are they much different from other large European nations:



Structure of labour cost, in % of total labour cost, 2008
Wages and salariesSocial contributions paid by the employerVocational Training CostOther ExpenditureTaxes paid by the EmployerSubsidies ReceivedEU-2776.46(i)22.030.770.50.590.35EA-1674.15(i)24.180.850.510.730.42Italy72.2227.710.220.63-0.78UK84.8214.630.56---France66.8628.292.120.12.750.13Germany78.0121.540.420.180.060.21Denmark91.367.50.511.391.031.78

Even the Italy’s tax burden does not really serve to justify levels of tax evasion, as the November 2011 The Cost of Tax Abuse research report by UK chartered accountant, tax specialist, and economist Richard Murphy who writes the Tax Research UK blog demonstrates:

Country Tax Burden %World Tax burden ranking

Italy----------43.13
Germany--40.65
France-----44.66
U K----------38.99

Per Capita Tax Evasion in Italy

On the basis of the data, the French, with their higher level of contributions could justify hiding earnings from the tax-man, but levels of tax evasion in France are not as high as in Italy, as this table complied using Murphy’s research showing per capita tax evasion levels demonstrates:

CountryPopulationIncome lost to Tax Evasion---- €Tax Evasion -----Per Capita €Italy

60,705,991

183,817,000,000-----------3028

UK

62,300,000

69,898,000,000-----------1122

France

65,821,885

131,873,000,000--------2003

Germany

81,724,000

165,547,000,000---------2026

Denmark

5,579,204

153,991,000,000--------27,600

The figure for Denmark is surprisingly high (I’m checking its accuracy) and makes Italians look almost virtuous.

What is clear is that anti-evasion systems in the UK are much more effective than in France, Germany, Denmark and Italy.

Other reasons I often hear from Italians to justify not paying taxes are excessive bureaucracy and the concern that their money simply is not being used wisely by Italy’s rag tag bunch of politicians.

Regardless of the excuses, it does not look as of Italian really do have a genuine reason for dodging taxes. There are plans for a clamp down on tax evasion in Italy too. Italy often plans, but rarely acts.

What do you think? Do the figures surprise you?

Read more: http://articles.businessinsider.com/2011-11-28/europe/30449393_1_tax-evasion-tax-burden-labour#ixzz1gQlTrhvT

[QUOTE=Atabey]


A little-noticed tidbit in the ongoing European budget negotiations is Italy plans to ban the use of cash for transactions over 1,000 euros. Italy wants to cut down on tax evasion, but we should hope that other countries start to realize the enormous economic benefit of ditching cash.[quote]

What this really is that those who believe in Big Government Control of our lives can garner more control.

[QUOTE=anthonyC]
[QUOTE=Atabey]


A little-noticed tidbit in the ongoing European budget negotiations is Italy plans to ban the use of cash for transactions over 1,000 euros. Italy wants to cut down on tax evasion, but we should hope that other countries start to realize the enormous economic benefit of ditching cash.[quote]

What this really is that those who believe in Big Government Control of our lives can garner more control.

[/QUOTE]


[B]Well, not so fast. First, you have to consider why Italy and some other nations are in deep trouble. And one very important reason happens to be the enormous Tax Evasion Schemes. If Italy, Spain and the rest of these countries simply paid their taxes like the other northern countries, Germany for instance, their debt troubles would probably never have taken the ominous turn of events they have recently.

But I get your take on the central government gaining ever more control over liberty. Sadly, if people want all these services, the piper has to be paid.

Second, going cash-less will generate enormous sums as many Black market transactions take place sans taxes. People that pay someone to paint their houses or apartment, fix their cars, etc., all contribute in small ways to the overall tax evasion problem.

I would allow pot, sex, and other so-called vices to be taxed and be out in the open. If you drink and drive, you get ticketed and can lose your drivers license. So too if you smoked pot and drive. But sex and then driving are free of summonses, unless done concurrently [/B]

42% Of All Luxury Boats In Italy Are Owned By People Who Claim To Earn Less Than €20,000 A Year

Alex Roe, Italy Chronicles | Dec. 13, 2011, 9:43 AM | 1,212 | 4



Yacht Italy Mooring



That levels of tax evasion in Italy are laughably high is no secret. Mario Monti, Italy’s replacement for tax-evasion encouraging Prime Minister Silvio Berlusconi, is attempting to bring Italy’s army of tax evaders to heel.

One recently introduced, if not yet permanent, measure of the Monti-led Italian government means it is now impossible to pay more than €1000 in cash for anything in Italy.

There has been talk of introducing a wealth tax to plug the holes in Italy’s leaky public finances. The trouble is, identifying the wealthy in Italy is not going to be at all easy.

Italian newspaper, Il Sole 24 Ore published a few facts which have been duly regurgitated by other Italian newspapers and websites. These facts were rather startling.

For a start, 42.4% of the 42,000 luxury boats in Italy are owned by people who say they earn less than €20,000 a year! Something is amiss, is it not? Such poor wealthy individuals would neatly avoid a wealth tax if it were to be based solely on declared annual income.

Of course, if you have a flash boat, you need an impressive car to go with it.

Italy, apparently, has more than 200,000 owners of luxury cars made by the likes of Mercedes and BMW, yet these poor people only manage to earn between €20,000 and €50,000 a year. Or rather, they only declare such earnings to Italy’s tax man – the rest is obviously spent on the latest Merc and a €1,000,000 motor yacht. Perhaps these clever Italians are declaring what is left over after they have paid the insurance on their motors and the mooring costs on their big boats?

Italy’s tax man is starting to wise up to the furbo tricks of Italy’s poor wealthy and putting two and two together.

One day, maybe, curious stories such as the one about the Italian who declared an annual income of €500 but managed to run no less than five Ferraris may become a thing of the past.

The only slight worry is just what Italy’s fantastic politicians will do with all the money clamp downs on tax evasion may recoup. Italian governments are not exactly famed for their prudent management of Italy’s finances. Some, such as a chap called Craxi, have been suspected of keeping a little back for themselves – perhaps so they can buy a suitably impressive mother yacht.

A clamp down on tax evasion in Italy is highly likely to net a few politicians too, even if their “capture” may be kept from the pages of Italy’s press.

In the meantime, Italy will first have to identify its wealthy before it can even start to think about introducing a wealth tax.

This post originally appeared at Italy Chronicles.

Read more: http://italychronicles.com/italy-well-heeled-poor/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+ItalyChronicles+%28Italy+Chronicles%29&utm_content=Google+Reader#ixzz1gSYKDzKq

That is one of those FACTS that people get all outraged but fail to ask some important questions.

Like what is a "Luxury Boat"? A 35 Sailboat built in the 70's might be "Luxury" for some but in reality is worth about $5-15K

Now who are the people who own these Boats?
How many are retirees? I know of many retirees who's income is well under $20,000 and live on their boats. Does that make them Tax evaders?

There may be some owners who are in that boat AC, but if someone owns one of the above or anything close, you'll have to admit that sub 20,000 euro earnings are suspect to say the least.

But on the more relevant question: Do you honestly believe that there isn't a problem-massive one-with tax evasion in Italy

Amid crisis, Italy confronts a culture of tax evasion

By Anthony Faiola, Published: November 24

ROME — In this nation where tax evasion can be considered part of a solid business plan, even dentists and hairdressers demand payment in cash — payments that then frequently vanish from accounting books like so many Cheshire cats.

But as the world’s eighth-largest economy struggles to pull back from the brink of a debt crisis that has much of the financial world on edge, Italy may be on the verge of a national reckoning over one of its most vexing financial — and cultural — problems: tax cheats.

Crisis-weary Maura Corinaldesi, for instance, joined a fast-growing Facebook group this month called “Friends of the Receipts” with more than 4,000 members naming and shaming tax-dodging trattorias and invoice-allergic plumbers. Corinaldesi, a 30-year-old public servant, took it one step further, calling the cops on a recent afternoon when a fruit vendor refused her a receipt.

A poll released this week by the Italian polling firm Demopolis found that 73 percent of Italians surveyed are now demanding tougher action against evasion.
Italy’s financial police are even taking the fight to elementary schools, trying to nip in the bud a cultural exaltation of the smartest evaders with a comic strip starring Finzy, a cute feathery cop who busts jewelry-wearing tax cheats and sniffs out loot stashed in exotic tax havens.

“If Italians are really going to fight this economic crisis,” Corinaldesi said, “there is only one place for us to start. We have to look at ourselves. We have to look at tax evasion.”

Cordinaldesi and others here appear to have a powerful ally in the anti-evasion crusade: Mario Monti, Italy’s new prime minister, an economist who took the reins from Silvio Berlusconi, the playboy billionaire who openly sympathized with the tax-cheating classes. In contrast, Monti put the nation on notice last week: He will try to pull the country out of its fiscal hole in part by targeting tax evasion, a societal ill seen as more damaging to public coffers than a bloated state sector or overburdened pension system.

Proposed new laws could soon change the way Italians buy and sell services every day, altering local traditions to combat a problem of evasion estimated to equal more than one-fifth of Italy’s entire annual economic output. Monti is also moving to reinstate one of the hardest duties to dodge — property taxes, abolished in Italy under Berlusconi.

The focus on tax evasion — a crime Italy has made surprising inroads against in recent years, only to stir up deep-seated resentments — comes as this nation and other southern European countries including Greece and Spain are coming under international pressure to tackle a host of growth-draining societal norms. In Italy, high evasion levels, for example, have dramatically forced up the tax rates for corporations and individuals who do pay their fair share, severely hurting competitiveness, constricting job creation and contributing to years of low to negative growth.

Failure to fully address such problematic traditions has directly contributed to the debt crisis threatening the global economy. At the same time, it has widened the divide between nations such as Italy and the other more modern, dynamic economies that share the euro, including Germany and the Netherlands.

“These issues are part of the core problem with Italian competitiveness and efficiency,” said Giuseppe Ragusa, economics professor at Luiss University in Rome. “They are also some of the hardest to fix.”

‘Only fools pay’

Dominated by small, often
family-run businesses, Italy’s economy has been hampered for years by, among other things, the common practice of “parentopoli” — the hiring of relatives and friends, often at the expense of building a meritocracy and fostering global competitiveness. Attempts to privatize state services to gain efficiencies, meanwhile, have become clouded by allegations of traditional political favor-pulling, resulting in payrolls stocked with under-qualified but well-connected workers.

But no problem is more glaring than Italy’s thriving “shadow economy,” where evaded taxes on legal commerce coupled with lost taxes from illicit or under-the-
table deals are costing the national treasury about $340 billion a year. If collected annually, that amount could pay back every last cent of Italy’s $2.6 trillion debt in just under eight years.

Yet in Italy, as a saying goes, “only fools pay,” and fools in some professions are few and far between. Jewelers, restaurateurs and real estate agents all declare an average taxable income of less than $18,500 a year — lower even than mechanics, who at least admit to earning roughly $30,000 a year.

If official tax returns are believed, this nation of 60 million with some of the most expensive urban real estate in the world is home to only 394,000 people earning more than $135,000 a year. Newspapers in Rome and Milan are rife with stories of “evasione totale ” — or entrepreneurs caught tooling around in Ferraris and Porsches despite declaring almost no income. Berlusconi himself managed to fend off at least two allegations of false accounting by forcing a law through Parliament that decriminalized falsification of company accounting books.

“Here’s the real problem with Italy: You have people with villas and back yards the size of a park still declaring 15,000 euros a year,” or about $20,000, said Sen. Enrico Morando, a member of a key parliamentary budget committee.

Keeping the change

There is reason, however, for hope. The world’s largest economies, prompted by the U.S. financial crisis, agreed in 2009 to take a zero-tolerance line on tax evasion. Since then, the Italian revenue service has managed to recover $13.6 billion in evaded cash, more than any other nation in Europe. It happened as the Italians pushed through strong new laws, including one that legally declared cash discovered in tax havens to be the spoils of evasion, putting the burden of proof on suspected tax cheats to show otherwise.

Italy’s 63,000 tax police have also stepped up investigations, backed by tougher penalties including mandatory jail time for the biggest cheats. But the recent crusade has provoked a fervor in an anti-tax nation notoriously distrusting of government. A handful of Sardinian shepherds, for instance, are on a hunger strike in opposition to official attempts to collect back taxes, while the imposing revenue service building in Rome has become an increasingly popular protest site.

Nevertheless, Italy is poised to go further. Lawmakers are under pressure to approve a law that would fight evasion by bringing Italy closer to becoming a “cashless society.” All transactions above a certain amount — some are calling for a threshold as low as 100 euros, or roughly $135 — would be required to be made by credit card, debit card, check, electronic transfer or other traceable means.

But not everyone here is optimistic about speedy change. After Corinaldesi, for instance, called the police on the produce vendor who refused to give her a receipt, she discovered that a law on the books still gives him an out for having a broken cash register — despite the fact that it’s been broken for a very long time.

“The country needs to change, but I’m not yet sure it will,” she said.

Is that what they used to define "Luxury Yacht" or is that your standard?

Even those pics could be misleading. Brand new they can cost 100 of thousands. 20 years or older....Less than $20K

Boats depreciate much faster than even automobiles.



I couldn't answer with all certainty....No more than you can by just a few articles.