Singapore's weak progress in going cashless is somewhat mind-boggling, considering the small size of the city-state, and a society that is so plugged into the digital economy.
But perhaps the conversations have been dancing around the nub of the issue for a critical group in the cash economy: tax on hawkers.
The statistics about Singapore's love for cold, hard, cash are well-worn.
Cash in circulation in Singapore is 8.8 per cent of GDP, compared to 4.4 per cent in Australia and 2.12 per cent in Sweden.
But a 2016 KPMG study gives off more clues.
It showed the use of cash is most prevalent when shopping at the wet market or hawker centre, with nine in ten transactions paid in cash.
It is likely why many Singaporeans still keep cash in their wallets.
The pain point here is also clear.
On top of transacting in cash - an expensive endeavour - the high-volume business especially at popular stalls means anecdotally the hawker business is less efficient than it should be.
Chats with industry watchers suggest that perhaps hawkers are loathe to go digital for fear that the tax authorities get an intrusive view of their earnings.
Sure, there are other valid issues that have been debated, mainly that small business owners worry about additional fees, and that the technology is slow.
Many hawkers also are unlikely to qualify for grants under the Productivity and Innovation Credit scheme, as they need to hire at least three local employees - excluding the sole proprietor - to be able to apply.
Retailers can use the grant to cover costs of setting up a point-of-sale.
But the ubiquity of digital payments in China at wet markets and small food stalls suggests technology costs can come down, given the use of mobile phones and QR codes.
Given the pace of innovation, payments technology will also improve.
What is less talked about is that it is rational for hawkers to avoid having their businesses scrutinised.
Given the digitised money trail, they may worry any book-keeping missteps - willful or unintentional - will be heavily penalised by the regulators.
This analysis is not meant to imply that hawkers and sole proprietors deliberately run afoul of the law.
Facts just show that in general, tax evasion is more common in businesses with high cash transactions, weak internal controls and poor record keeping.
The great swathe of food zealots here who visit the hawker centres frequently will understand the obvious risk. (And any Singaporean who does not enjoy hawker food should have his or her citizenship revoked.)
When was the last time you got a receipt for your char kway teow?
The Inland Revenue Authority of Singapore (IRAS) says it adopts a "risk-based approach" in dealing with tax compliance.
And this comes as hawkers who were nabbed for evading taxes were running high-profile businesses.
Duck, Duck, Goose
For example, the last big conviction of tax fraud by hawkers had to do with Kay Lee Roast Meat Joint, which was sold for a mouth-watering S$4 million in 2014.
For ducking tax, the husband-and-wife duo was in 2016 fined and jailed four weeks for tax evasion.
Another was in 2007, when the owner of Tip Top curry puffs failed to cough up the dough, under-declaring his million-dollar earnings.
Hawkers' business income is treated as part of their total personal income and taxed at personal income tax rates.
To sniff out tax fraud, IRAS relies in part on media reports on hawker haunts in Singapore, as well as field observations, which could involve tax auditors counting out plates of sold chicken rice (perhaps, to that local ode to the national treasure as sung to the tune of Edelweiss).
IRAS also counts on whistle-blowers when examining high-risk cases, such as ex-employees, business partners, customers or ex-spouses of taxpayers. (IRAS has no shortage of snitches. It receives an average of about 1,000 tip-offs a year, with just about 5 per cent of these tip-offs deemed credible. In the past few years, IRAS has paid out more than S$100,000 to three whistle-blowers, though only about 5 per cent of the informants accept the reward.)
The point is that if a high-profile hawker is among the minority of errant taxpayers who deliberately evade taxes, he or she will be eyeballed anyway.
The mushrooming of food blogs has perhaps, made tax auditors' jobs more palatable.
But much work remains to assure the majority of hardworking hawkers that regulators are not there to unfairly penalise small business owners, and that there are commercial benefits in going digital.
Indeed, there are big economic perks to addressing such scepticism.
The KPMG report, done together with the Monetary Authority of Singapore, estimates the social costs of cash and cheques to be around 0.5 per cent of GDP, or about S$2 billion per year.
It also expects potential annual savings of about S$150 million to the economy by making payments cashless at hawker centres and in taxis.
India, which is on a massive drive to weed out corruption in its cash-based economy, has offered tax incentives to small-time businesses that use cashless modes of payments.
While India's challenge is multiple times that of Singapore, the potential savings from promoting a cashless society here is no small change.
Some form of tax amnesty or tax break, coupled with a seamless cashless payment infrastructure, may spur more hawkers and other small business owners to take cash out of the system in Singapore.
In time, hawkers can then be eased into cashless payments that - if done right - prove to drive more sales.
The government has been on a relentless drone to get businesses to innovate.
If going cashless is a part of that puzzle, then getting hawkers on board is crucial.
A broader perspective on tax for hawkers could be that missing olive branch.
This article was first published on March 31, 2017.
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