In a move covered by EU legislation and adopted by Portugal, the socialist administration is to ban trade cash transactions of €3,000 or more from next January.
The draft law prohibits any such cash transactions with a suitably stiff fine of 25% of the value if a cash payment is detected which exceeded the limit.
If the proposal goes ahead, individuals and companies selling goods or services and receiving payment in cash, even when full receipts are issued and accounted for, will be fined.
The result the government wants is a back door way of refinancing banks which it hopes will be taking in more deposits as a result of the new restrictions.
This still is a draft law but the intention shows the mistrust now existing between the State and taxpayers, the government using the 'Panama Papers' excuse to push through a range of measures to restrict citizens’ fiscal rights and freedoms.
The draft up for discussion in parliament next week reads that as from January 1st 2017, "payment in cash is prohibited for transactions of any kind involving amounts greater than or equal amounts to €3,000."
Foreigners can’t be trusted either, "the limit is €15,000 whenever payment is made by non-resident individuals in Portuguese territory unless they are a registered business owner or trader."
In case of paying for a product or service in cash, but in instalments, the total is taken into account with all part payments added together.
Socialist MPs have been briefed already to put the case forward in the press that this measure is a one step closer to getting the proposal into the statute books as it already is listed in the draconian 'Lei Geral Tributária,' or General Tax Law, as "general prohibition of trading in cash for any and all legal transactions involving amounts exceeding three thousand euros."
Portugal’s financial sector has made sure it is exempt from the €3,000 ban despite the vast majority of recent financial crimes and losses in Portugal being attributable to those running Portugal’s financial sector.
Citizens also will be restricted from paying the taxman, council tax, VAT bills, social security debts and court fines in cash if the amount is over €500, despite the same EU law that allows countries to limit cash transactions giving a open-ended limit exemption to citizens wishing to pay the State.
On top of the massive 25% fine for those accepting such a cash payment, there is an additional fine of 5% if the transaction also is deemed by the Tax Authority to be 'tax evasion.'
Along with this €3,000 restriction, the government also has put forward a draft law that puts an end to bearer bonds which soon will have to be registered in someone’s name as the State is terrified that this useful form of liquid saving is only the preserve of arms traders and drug barons.
Parliamentary time has been set aside next week to discuss this slide back to a pre-1974 Portugal where the State micro-managed its citizens’ financial lives.
What governments fail to learn is that the more repressive a tax regime and its associated laws, the more adept citizens become at finding ways around the rules. The result is that more business is pushed under the radar and the grey economy will continue to thrive.
