After India and Venezuela banned high-value notes, Australia, a developed economy, is considering a ban on the A$100 note, its highest denomination. While Venezuela’s tottering economy is battling hyperinflation, Australia, like India, is trying to flush out money from its ‘black’ economy.
On Monday, in its mid-year budget update, Prime Minister Malcom Turnbull’s government will unveil a series of measures aimed at recouping billions of dollars lost to untaxed cash payments, news.com.au reported.
This underground economy is said to account for 1.5 per cent of the country’s gross domestic product, and is estimated to be worth about $21 billion.
The government is setting up a ‘black economy’ taskforce under former KPMG global chairman Michael Andrew to weigh the future of the A$100 note, which is believed to facilitate tax dodging and welfare fraud, and also look at capping cash payments beyond a certain amount.
Currently, the country has 300 million notes of A$100 in circulation. Indeed, reports indicate that about 92 per cent of Australia’s currency, by value, is in $50 and $100 notes. Any demonetisation drive will be further complicated by the fact that the Australian dollar is a freely convertible currency and its notes are in circulation around the world.
The taskforce will study the experience of France, which does not allow cash payments above €1,000. It will include the Australian Tax Office, Reserve Bank of Australia, the Australian Securities and Investment Commission, the Australian Transaction Reports and Analysis Centre, and the immigration and human services departments.
Last month, Bloomberg reported that Swiss global financial services major UBS had called for a ban on the A$100 note. “Removing large-denomination notes in Australia would be good for the economy and good for the banks,” UBS analysts led by Jonathan Mott said in a report. This, they said, would help reduce crime and welfare fraud (claiming support while working for cash), while increasing tax revenue (fewer cash transactions) and ensuring a “spike” in bank deposits.