The Australian government is considering a range of steps to cut down cash transactions in the country as a means to curb the so-called black economy.
The federal government is awaiting a final report from the Black Economy Taskforce which is due in October 2017.
The report is expected to provide recommendations to curtail the growing black economy in the country. Some media reports have estimated the size of the black economy to be in the range of $23 billion to $50 billion.
According to the Australian government, tax avoidance through cash payments was costing the exchequer upto $10 billion in revenue, which is money that could be used for welfare and other civic services.
A consultation paper by the Black Economy Taskforce stated that cash transactions provided anonymity to criminals which was why it was a preferred mode. In its interim report, the taskforce has put forth a number of ideas to curb the cash economy including tracking of banknotes.
The government announced last year that it was planning on implementing a cash crackdown and indicated that the A$100 note was being put under review. The country’s central bank, the Royal Bank of Australia pointed out that criminals and hoarders preferred A$50s rather than the larger A$100 denomination note. According to latest data, there are around 335 million $100 notes in circulation and 92 per cent of all currency in terms of value is in $50s and $100s.
Several other steps are being considered to reduce the extent of cash payments in the country such as: insisting wages be paid using non-cash methods, linking workers’ compensation payouts to income tax, lowering the GST threshold, introducing measures to target high risk sectors like restaurants and tax incentives for non-cash business models.
However not everyone is happy with the proposed move. Opposition leader Liberal Democrats Senator David Leyonhjelm has stated that this war on cash by the federal government was threatening the freedom of Australians.
In a statement Senator Leyonhjelm said
This pursuit of the black economy is probably the biggest threat to our liberty of all. This idea that you’ve got to be more regulated otherwise the black economy will grow and therefore the government will miss out on its taxes, that worries me, because they seem to take the view that taxes are sacred and anything that protects [tax revenue] is legitimate
Greg Medcraft chairman of the regulatory body ASIC stated in a recent media interview that over the next decade traditional banks may start issuing bitcoin-style digital currency. He pointed out that not only will a digital fiat currency be convenient; it would also make it easy for the government to tax and track.