The Australian government will be launching a new financial task force that will be overseeing taxation in the cash economy. Kelly O'Dwyer, Financial Services Minister of Australia, said details regarding the new unit will be forthcoming in the mid-year budget, which is set to be released next Monday.
The measure is part of the Australian government's multi-pronged strategy of reclaiming some portion of lost tax revenue. According to some estimates, the black economy of Australia is valued at $21 billion. This figure amounts to about 1.5% of the Australian GDP, “If we can get a percentage of that, obviously that’s revenue that is owed to the Australian people,” said Ms. O'Dwyer, in an interview with ABC radio.
Michael Andrew, former chairman of KPMG, will be heading the new task force. Australian financial regulators, The Reserve Bank of Australia and The Australian Taxation Office will be collaborating with the newly formed organisation. Along with tackling illicit black market activity, the task force will also focus on a variety of financial crimes.
As part of the attack on the black market sector of the Australian economy, regulators may consider removing the $100 AUD banknote from circulation.
When asked about the future of the $100 note, Ms. O'Dwyer told ABC radio:
"I'm not going to put a limit on what the taskforce can look at."
Popularity of the $100 note has surged this year! According to the most recent report published by the Reserve Bank, the amount of $100 banknotes grew by 9% in 2015/2016. This figure is about 1.5% higher than the 10-year average, which stands at roughly 7.5 percent.
Data from the Reserve Bank of Australia from June of this year, shows that $100 banknotes number about 328 million, which represents 47% of all cash in circulation in the country.
The bank’s report explains that the rise in $100 notes can be attributed to fluctuation of exchange rates and economic uncertainty, however, the report notes that “growth in high-denomination banknotes is well above recent growth in nominal income.”
The report also states that $100 notes are hoarded in times of low interest rates and used as “store of wealth.”
When asked about cash payments during today’s interview on ABC radio, Ms. O'Dwyer said:
“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.”