Could the black economy crackdown spell the end of cash?
The emerging shift from Aussies opting for card payments over cash could continue to accelerate, with a recent report into the Australian black economy making a number of recommendations that could drastically disincentivise cash transactions.
The Interim Report produced by the Black Economy Taskforce, which has been tasked to combat black economy activities such as tax avoidance, floated the possibility of penalties for cash-paying consumers who fail to obtain a receipt among a number of other recommendations.
“Our current anti-black economy laws focus on businesses rather than consumers. However, where they propose or readily consent to cash payments to avoid tax, consumers are part of the problem,” wrote Michael Andrew, Chair of the Black Economy Taskforce.
“We intend to examine the merits of consumer-focussed sanctions, including the loss of consumer protections, warranties and legal rights for people who make cash payments without obtaining a valid receipt.”
Mr Andrew noted that such a move would be part of an agenda of wider cultural change, which is likely to include clamping down on businesses and individuals that benefit from tax avoidance and cash-in-hand jobs.
The report also recommended further consultation on the idea of an ‘economy-wide’ cash payment limit that could cap cash transactions to $10,000.
Cash payment limits have already been introduced in a number of countries including France, which has prohibited cash transactions over €1,000 ($1,500 AUD) for its own citizens since 2015.
“While most individuals and businesses use cash legally, the anonymity of cash is exploited by black economy participants and those engaged in illegal activity including money laundering, terrorism financing and illicit trade,” wrote Mr Andrew.
“The Taskforce intends to examine the idea of an economy-wide cash payment limit in moredetail, including through public consultation. We recognise that both costs and benefits willneed to be considered, including alternative ways of achieving the same objective.”
Any move to restrict the use of cash could further accelerate its decline as a payment option, with the RBA’s recent Consumer Payments Survey revealing that cash use had roughly halved in recent years - accounting for 70% of payments “a decade or so ago” to just 37% in 2016.
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