While India is still debating the effects of demonetisation of big currency notes of Rs. 1000 and Rs. 500, Australia is also contemplating a similar move to crackdown on the black economy.
A black economy taskforce, to be announced during Monday’s mid-year budget update, will investigate the possibility of scrapping the $100 notes and cash payments over certain limits.
Revenue and Financial Services Minister Kelly O’Dwyer told ABC Radio that there were three times as many $100 notes in circulation as $5’s.
“The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” she said.
The black economy accounts for 1.5 per cent of Australia’s GDP with many payments made in cash, which Ms O’Dwyer says isn’t declared.
“There's nothing wrong with cash per se, the issue is when people don't declare it and when they don't pay tax on it," she said.
The task force will draw on the experience of countries like France, where the government banned cash payments of more than 1000 euros.
Refusing to rule out scrapping the $100 notes, the minister said it was up to the expert panel to make the recommendation.
"I'm not going to put a limit on what the task force will look at," Ms O'Dwyer said.
Sukhdeep Singh* who owns a vehicle repair business in Melbourne’s west said it’s the competition that forces businesses like his to deal in cash.
“When a customer comes to us with a job that should cost him $1000 and he says another business is willing to do it for $600, you either do it for less than that or lose the job,” he said.
He said many customers prefer paying cash.
Sukhdeep says he is not worried about the possible removal of $100 notes.
“I can’t say for others, but I as a small business owner would prefer paying taxes and do the right thing. This would enable me to secure finance for business expansion, I can grow that way.”
(*Not his real name)
