Dump the $100 note and only crims will complain
THE $100 note should be scrapped. It is cumbersome, impractical, imposes a severe cost on small business, and is a preferred vehicle for criminals, including tax evaders, human traffickers and drug dealers.
Tradespeople are sometimes happy to accept cash for a job and give a discount because they avoid paying tax. Larger notes are preferred.
The Reserve Bank should recall all $100 notes – of course compensating the owners – and shred the lot. Within 12 months, they should be declared illegal other than in exceptional circumstances. The move would send panic through Australia’s criminal class. But anyone who legitimately holds a stash would have nothing to fear.
But first, a question. Do you have a $100 note in your purse or wallet? Chances are, you don’t. Do you have a stash of $100 notes in your household safe or knickers drawer? Chances are, you don’t. I certainly don’t. In fact, I can’t remember when I last had one. Yet the Reserve Bank estimates that $35 billion worth of $100 notes are in circulation – that’s about 14 for every Australian.
If you and I haven’t got them, who has? Some are legally held by currency punters who believe the Aussie dollar will remain strong. It’s a hedge against low interest rates and other investment options.
But a more likely reason people hold $100 notes is to hide them from the Australian Taxation Office. Because of their high denomination, they take up less space and are easy to store. Strip the economy of $100 notes and all sorts of shady people would come forward to cash them in, with all sorts of shady reasons for holding so much cash.
Only banks would be able to exchange the $100 notes, so the taxman and the police would have a window to assess who has been holding the money and why.
The likely prosecutions for tax evasion, human trafficking, drug sales or theft would generate tens of millions of dollars in extra revenue for the Government.
Oh, there might be efforts to launder the notes at racetracks and casinos, but the flood of $100s would raise suspicions and prompt questions from the authorities.
With $100 notes out of circulation, it would be that much harder for the black economy – the tax dodgers who are being supplemented by higher taxes for honest people – to operate. It would remove the most lucrative target for counterfeiters, and the abolition of the $100 note would not only reduce fraud and criminal activity, it would help small business.
It is perfectly legal to buy a $4 cup of coffee or pay a $12 dry cleaning bill by handing over a $100 note. That means small business must hold change for at least $100, and almost certainly, a lot more. That generally requires overnight security or a visit to the bank, and it also leaves a full till as a temptation for staff and an obvious target for small-time thieves. These are hidden charges on a small business that might only turn over $3000 a day.
For consumers, the $100 can also be a liability. There are plenty of places where $100 notes are not accepted, for example at automatic ticketing outlets or at car parks and railway stations. Some retailers also refuse to accept $100s, either because they haven’t got change or they fear the notes may be counterfeit.
No doubt there would be resistance from some to the dropping of the $100 note. But they may be the biggest beneficiaries of retaining it in circulation.