Australia may follow India and demonetise its highest currency note, $100.
Speaking to Australian media on Wednesday, revenue and financial services minister Kelly O’Dwyer pushed for a review of the $100 note and cash payments over certain limits as the government looks to recoup billions of dollars in unpaid tax.
The black money economy in Australia is estimated to be about 1.5 percent of its GDP. The media reported that the government is expected to setup a taskforce to investigate black money.
O’Dwyer said that not only is the lost revenue owed to the Australian people for schools and hospitals, but it’s also critical for those who do the right thing and pay tax.
“The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” she said.
Despite the broad use of electronic forms of payment in the country, O’Dwyer said there are three times as many $100 notes in circulation than $5 notes.
Australian media estimates that there are currently 300 million $100 notes in circulation, and 92 percent of all currency by value is in $50 and $100 notes.
The minister did not rule out the removal of the $100 note, saying it was up to the expert panel to provide recommendations. “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 taskforce will draw on the experience of countries like France, where the government banned cash payments of more than 1000 euros. “I’m not going to put a limit on what the taskforce will look at,” O’Dwyer said.
The minister’s comments comes after a report by Swiss financial consulting firm UBS recommended Australia scrap the $100 note. According to UBS, benefits may include “reduced crime (difficult to monetise), increased tax revenue (fewer cash transactions) and reduced welfare fraud (claiming welfare while earning or hoarding cash)”.
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