The Australian Chamber of Commerce and Industry said the Turnbull government had the “wrong policy focus” and should not expect a decline in black-market activity as a result of the ban.
In fact, the policy could undermine the integrity of the financial system, ACCI said in a submission.
“Cash is legal tender and its value must be protected, not undermined,” it said.
Just days after accountancy firm KPMG advised the Government to lower its cash payment limit well below the $10,000 announced in the May Budget in a bid to thwart the so-called ‘black economy’, the Australian Chamber of Commerce & Industry (ACCI) has attacked the limit:
“Resources and effort would be better spent dealing with the causes of black-market activity and tax avoidance, which, as the Black Economy Taskforce correctly noted, are high taxes, a high regulatory burden and low profit margins”…
ACCI said the taskforce recommendations were based on assumptions, but facts were required.
“As a first step, policymakers should first determine the nature and size of the problem,” the submission says.
“To do this, the proportion of transactions above $10,000 that are related to illegal activity – actual amounts, not estimates – needs to be established, as does the proportion of those payments that are cash based.”
The ban is part of a crackdown expected to raise more than $7 billion and improve the government’s bottom line by $5.3 billion.
Demanding that the Government provide actual hard evidence, rather than estimates, about the amount of illegal payments being made above $10,000 is ridiculous. This is the black economy we are talking about, so its activities necessarily fall outside of the regulatory net and are largely secret.
The best we can possibly hope for are estimates. And in this regard, those provided via the year long Black Economy Taskforce are sufficient.
Besides, it’s hard to see many downsides from banning cash payments above $10,000, nor why the ACCI oposes such moves. At the margin, it would make money laundering and tax avoidance more difficult, which is certainly a good thing.
That said, if the Government is truly serious about thwarting the black economy, it would also impose addition measures, including:
- putting an expiry date on $100 notes, as well as making electronic transactions more attractive by reducing card fees;
- reforming Australia’s corrupted visa system, which facilitates widespread exploitation of foreign workers, many of whom work for “cash-in-hand” below the minimum wage;
- greater enforcement of the illegal side of the black economy, such as illegal gambling, drugs and cigarettes; and
- implementing the long overdue second tranche of anti-money laundering regulations targeting real estate agents, lawyers and accountants.
It’s time to restore some integrity to Australia’s tax system.
