More than 20 months after PM Narendra Modi announced the demonetisation reform in India, debate on whether to scrap the $100 note has gained momentum in Australia. Notably, Revenue and Financial Services Minister Kelly O’Dwyer had flagged a review of the $100 note and cash payments over certain limits earlier, as the Revenue government sought to recoup billions in unpaid tax. Interestingly, speaking to ABC radio in December-16, shae did not rule out scrapping the notes. “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 had said.
Apart from the concerns regarding tax evasion, experts in the country says that it will also help to curb drug dealing and human trafficking. Following India’s move note-ban move, a report by UBS had said that a similar crack-down down under would be good for the economy and the banks as well. “Given the increasing level of digital transaction penetration we believe Australia could move to remove larger denomination notes,” the firm had said, adding that benefits from such a move may include “reduced crime (difficult to monetise), increased tax revenue (fewer cash transactions) and reduced welfare fraud (claiming welfare while earning or hoarding cash).”
“From the banks’ perspective there would likely be a spike in deposits — if all the $100 notes were deposited into banks (ignoring hoarded $50s), household deposits would rise around 4%,” UBS had noted. Interestingly, according to the estimates of Australia’s Reserve Bank, $35 billion worth of $100 notes are in circulation. The figure implies that on an average, every Australian has about 14 $100 bills.
The entire debate over scrapping Australian $100 currency note gathered steam after the government had decided to block all loopholes in the black economy. “The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” Ms O’Dwyer had said. She noted that despite the broad use of electronic forms of payment, three were times as many $100 notes in circulation than $5 notes. “It does beg the question, ‘Why?’” she had asked.
