And a really, really, bad idea at The Guardian

Maybe, but an opportunity glimmers in the cloud of a crisis in which fiat money\’s goose is slowly but surely being cooked. If we got ahead of the game and abolished cash, we could tax every payment, from whatever source, on its way into a bank account. The taxman could apply allowances, and even boost them with the deluge of cash, but then challenge anyone wanting a rebate to come forward and make their case – and with a straight face.

The idea that the taxman, even the super taxmen of PCS, could accurately tax every single money transfer in a modern economy is so ludicrous as to be entirely phantastical. For example, there are some 3 billion LINK transactions a year. CHAPs processes, I think, £80 trillion a year, something like that (these two are cumulative, one does not include the other I don\’t think).

The basic suggestion is just farcical idiocy.

This is quite apart from the appalling civil liberties implications of course, that everything belongs to the government and we only get to have our pocket money.

Actually, in one way this is quite impressive. They\’ve managed to come up with something even more bleedin\’ stupid than a Ritchie suggestion. Which was, you might recall, that every wage payment transaction should be made through HMRC. That, at least, didn\’t try to have HMRC looking at every £3 card transaction for a bacon buttie.

I fear that our historian, Mr. Chakrabortty, has been trying to write about the economy again.

22 thoughts on “And a really, really, bad idea at The Guardian”

  1. Oh no. This is a really, really good idea at the Guardian.
    Then we can create our own system of cash transactions & shift the entire economy into the black sector. Cut the State off from any tax income, whatsoever.
    Bring it on!!!

  2. So the newspaper that regular writes articles about how great the Totnes pound and the Bristol pound is now decides it wants to get rid of cash altogether ?

  3. But but but…. If we abolished cash, we would still have fiat money. Unless he’s plans gold backed electrons.

    If every transaction was electronic, would it be so hard to have x% hived off each one and sent to HMRC? Could the people who run CHAPs implement it for instance?

    Dreadful idea, but technologically feasible?

  4. Luis, it sounds technically feasible if it was just skimming every transaction. But the moment there are exceptions, refunds, rebates, etc it becomes a none starter. And it won’t be guaranteed 100% foolproof either. So all eggs in one basket.

  5. Witchsmeller Pursuivant

    Way to slow the economy down even further. And I’m pretty sure that those private transactions which require cash (drugs, hookers etc) will continue using another currency; dollars or Euros.

  6. It’s basically the same idiocy that made lefties believe that planning the economy was a good idea. Showing that the Grauniad remains a sink of stupidity.

  7. Would do wonders for the price of gold, silver platinum etc.

    Note to Guardian writers: Bank notes aren’t the only form of cash money you know.

  8. Well, it’s certainly technically feasible. I forget the name of the fraud where the fraudster programs a computer to slice off a tiny amount from every transaction passing through bank, and then retires very quickly to a sunny extra-jurisdictional island. Proves the concept.

    But applying a ‘stamp duty’ to every transaction in the economy? It’s an amusing thought experiment, but it would be a real-world nightmare. You’d (a) generate a massive black economy as bloke in spain suggests, and (b) see economic activity dive. Just when we need the economy to pick up, trust the Guardian to suggest the single policy most likely to flatten it!

  9. There would be some level of tax, sufficiently low, that the cost and inconvenience of avoiding it would keep avoidance minimal. This does not mean it’s a good idea.

    Meanwhile why doesn’t the Guardians economics writer know what fiat money is

  10. This would do a lot of good for children’s teeth since they would not be able to buy any sweets – the cost of processing even an automated transaction exceeds the price of a roll of fruit gums or pack of liquorice allsorts or a quarter of bullseyes or …
    Pocket money is abolished, bus fares double to cover transaction costs …
    This reveals how far journalists in the Grauniad are disconnected from ordinary people.

  11. the cost of processing even an automated transaction exceeds the price of a roll of fruit gums

    No. The current fee levied for processing a debit card transaction in the UK is c20p. The marginal cost is not, as is obvious when giving two seconds’ thought to the negligible amount of ‘doing stuff’ that it involves. Indeed, in Australia, the current fee on a debit card transaction below $15 is zero.

  12. No idea how much fruit gums are. However the profit margin may not cope with a 20p transaction charge. Newsagents adding 20p onto price of all products while larger retailers not selling in such small purchases can undercut even more than they do now…

  13. Confirms my suspicions about the man’s communistic leanings which he vigorously denied on Twitter (to his credit he doesn’t bar people like Murphy) – Cash is almost illegal in North Korea, and almost nowhere else I can think of… Nice to know the Grauniad’s ‘ahead of the game’ in using that country’s a blueprint!

  14. In God we trust… all others pay cash.

    It would be one way of getting the whole country to use US dollars in short order.

    In practical terms the hardware we use isn’t tough enough to operate without a cash backup – I always have £100 or so about me after an interesting weekend I had a few years ago when a cash machine swallowed my (only) debit card at 6.00pm on the friday of a bank holiday weekend, leaving me with almost no food, no fuel in the motor and about £3.70 in small change – it wasn’t a happy weekend.

  15. John77: no, you’re missing the point still. The cost of the transaction is as near zero as makes no odds. Currently Mastercard and Visa stuff the retailer; this is something the UK government regrettably tolerates but could easily change.

  16. John b – as a retailer we don’t get stuffed by our card processing company. We pass on additional costs to all customers, whether they use a card or not.
    Equipment hire fee payable quarterly, processing fee payable monthly, processing fees on each transaction – simple way to deal with the costs is as always pass it on in prices.
    Every retailer I know does the same.

  17. @ john b
    If it actually *was* “as near zero as makes no odds” some bank or consortium of banks would offer it at a lower price.
    There are three main elements – capital cost in hardware and software that has to be amortised over the life of the capital, maintenance costs of the hardware and software (did you hear about RBS?), and insurance to cover the risk that the debit card is stolen or the owner does not have sufficient funds. None of these are “as near zero as makes no odds”. And the cost to the retailer includes the time the shop assistant waits for the bank’s computer to confirm or reject the transaction which is over 10p a minute.
    You seem to think that the cost of a telephone call and the electricity running the computer at the other end is the only cost, forgetting the need to record every transaction and report it to the account holder (ink on paper unless you’re so naive as to rely absolutely on someone else’s computer).
    Even that is not “as near zero as makes no odds” – otherwise why do they skip checking the bank balance on transactions viewed as trivial? Now for children’s pocket money the “trivial” level would have to be less than 10p.

  18. Given the herculean intellects we have in government in this country, would it surprise any of us if in the white paper eliminating cash it made illegal such ‘minimum charge’ practices on either the retailer or the merchant services provider.

    Obviously the costs would still exist and get recharged somewhere else in the pipeline.

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