Dump the $100 note and only crims will com­plain

The Courier-Mail - - OPINION - REX JORY Rex Jory is a News Corp Aus­tralia colum­nist. rex.jory@news.com.au

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.

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