Business and the cashless economy

Sir, – It is with great confusion and disappointment that I read the suggestion of Sam Donnelly, the owner of a number of barber shops in Dublin, that the Government should cut the rate of PRSI for employers running cashless businesses or offer some equivalent incentive ("Inflation is upending the labour market, so where will it end?", Business, February 4th). He suggests that such a measure would "would flush out the cash-in-hand businesses" and allow him to compete with employers who offer unrecorded and untaxed cash payments illegally to their employees to supplement their pay.

This proposal is not considered in the broader context of the debate on the merits of a cashless economy more generally. While there is some extent to which cash can facilitate black market payments, there may also be costs to limiting the ability of consumers to use cash in terms of privacy and in limiting access to important transactions for certain categories of consumers who are more likely to rely on cash. That the State should be offering a tax incentive for businesses to refuse to deal in cash is far from a foregone conclusion at this stage. However, the more significant and indeed more obvious flaw in this suggestion is that it does nothing to prevent the practice of making untaxed payments in cash to employees. The difficulty with these transactions is that they are not recorded. Even if a cashless business did avail of a reduced rate of PRSI, is there anything stopping it from withdrawing money from an account and paying an employee in cash without making appropriate deductions, other than the fact that this is already illegal? In a world where cash still exists, these payments can still be made. Such an incentive at the level of an individual business does nothing more to prevent businesses from making these payments beyond what the existing law already provides. – Yours, etc,

CHRISTOPHER

McMAHON,

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Dublin 2.