The government has proposed, in the 2023 budget, to partially shield retailers from those fees by scrapping sanctions if they only take cash for payments under €60 (US$63).

However, the move is seen as going against the spirit of commitments taken with the EU – and encouraging tax dodging in a country where some €100 billion are evaded every year.

“An option being discussed is using resources stemming from a solidarity contribution weighing on banks to lower those fees,” ruling lawmaker Tommaso Foti said.

Foti is from Prime Minister Giorgia Meloni’s Brothers of Italy party.

He spoke at the end of a meeting with Meloni and key coalition figures over the 2023 budget.

Maurizio Lupi, leader of a small centrist party within the coalition, added that Rome was seeking ways to erase bank commission fees for digital payments under €15 or €20.

In the 2023 budget, the government has also proposed to raise a limit on cash payments to €5,000 from a previous threshold of €1,000 – kicking in next year.

The Bank of Italy on Monday warned that reducing regulatory curbs on the use of cash will fuel the black economy and make it harder to crack down on tax cheats.

A day earlier, Meloni said her government could water down its plans to favour cash over credit cards for small payments, following talks with the EC.

In its EU-funded post-Covid-19 recovery plan, Italy promised the EC to cut the so-called “tax gap” – the difference between potential tax liability and the amount of taxes paid – to 15.7% from 18.5% in 2019, something which implies recovering around €7-8 billion of evaded taxes by 2024.