Thursday, 21 May 2015

Electronic Transfers

My current series of blogs is about technology, tax calculations and anti-fraud measures.

It is therefore timely to see another news story containing the latest news that Cashless payments have overtaken the use of notes and coins for the first time. 

This outlines the trend that an ever smaller proportion of transactions are taking place with cash.

In this series of blogs I argue that this makes radical tax proposals such as mine more feasible. This is because it will push those engaging in illicit activities to launder their gains into the official economy. At the same time, it becomes easier to record what people spend and use this data to check that they have declared all of their income.


Unknown said...

Kind of makes me wonder if a national government will (or has, and I've not heard about it) try to come up with a replacement or substitute for current privately owned methods for cashless transactions. It seems like a government would have an interest in ensuring that the majority of transactions are not under the de facto control of a small group of corporations.

Could even be done without fully creating and implementing their own infrastructure, they could just need to create a nationalized API and associated documentation and standards for cashless transactions and grant anyone who wanted to make their own cashcard (or even cash app) access to them. You'd need a pretty slick setup for security on it all, of course, but from a technical standpoint the government would just need a set of authentication servers to act as an intermediary between the purchase point and whatever banks the transaction is associated with and could use the existing physical infrastructure with just some software updates.

It would give the advantage too of not forcing anyone to use a bank to take advantage of the cashless system. You could have a basic government "account" by default with the option to switch it over to a specific bank account, that way it doesn't exclude lower income individuals.

As it is in Colorado at least, if you, say, get money from unemployment insurance from the state, it comes on a Visa debit card, so Visa ALWAYS gets a cut of your unemployment insurance, no matter what. Seems a little screwed up to me. Shouldn't be forced to use a specific private corporation like that.

dougbamford said...

Thanks Matt. I think the response to your suggestions comes down to the empirical issue that applies to all public vs privatised debates. Namely, is the disadvantage of having a single provider with no market incentive to improve performance greater than the disadvantage of allowing people to make a small profit from the service. I would think the rule is that if you design the system well enough the private option is going to be better.

My thinking in this series is that if the government requires financial institutions to collect certain kinds of data and integrate their systems such that this data is available to the relevant authorities then it opens up exciting new possibilities for tax policy.

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