Under the Radar
Most Americans have a very favorable view of Australia, picturing a laid-back, sports oriented populace enjoying a great climate and a pint of Foster’s lager at the beach. The Australian government, however, sees a nation rife with tax-avoiders. The government actually created a commission called the “Black Economy Workforce” to analyze the negative consequences of the underground economy. It reported that up to 1.5% of Australia’s GDP ($20 billion U.S.) was hidden from government tax collection, costing the government billions in tax revenue. That is a very big problem for the Australian political class.
The Black Economy Workforce suggested several possible solutions among which were
- Withdraw the $100 note from circulation to make it much more difficult to do large transactions without leaving a paper or electronic trail.
- Crack down on the “gig” economy by encouraging whistleblowers to alert authorities of anyone they suspect of working for cash and not reporting it on their tax return. That would include Uber drivers and homeowners who rent out properties through Airbnb or HomeAway. And of course those notorious tax evaders, babysitters.
- Prohibit any cash transactions above $10,000 regardless of the currency notes used.
- Perhaps the most drastic suggestion involved redesigning Australia’s currency to include microchips which would enable government enforcers from the street to scan homes and businesses for “excessive” cash stashes. No point having a safe or a coffee can buried in the backyard!
- Australia is hardly alone among the world’s governments in targeting cash for punitive treatment. Some governments attack cash because it aids tax evasion. Some claim cash undermines the War on Terror. Others claim that cash, the lifeblood of the “underground”, “black”, “unofficial” economy, undermines respect for law (especially tax law) and enables money laundering and other criminal behavior, such as bribing government functionaries. America’s former Treasury Secretary, Larry Summers, called last year for the elimination of the $100 bill citing many of those reasons.
- The European Union has announced the phasing out of the 500 Euro note and the 100 note may be next. Some EU countries have imposed low limits on cash transactions, notably France and Spain (1000 Euro) and Greece (500 Euro). Some Nordic countries are trying to accelerate the move to a cashless economy where all payments are made electronically with debit or credit cards. Central bankers embrace the ideal of a cashless society, because how can there be runs on banks during a financial crisis if there is no cash to withdraw? Imposing negative interest rates would be much more effective if the payment system were all electronic. With governments’ enormous data gathering capabilities in a cashless economy, a person’s every purchase, with its location and time, could be monitored and recorded. There would be nowhere to hide. It appears George Orwell did not have enough imagination when he envisaged Big Brother.
Posted on Oct 9 2017
by Bill Miller