Events disrupted the flow of tax and other news yesterday, but some things are worth catching up on.
One thing of importance that happened occurred in India. As the Indian Express reported:
In a major step to check black money, Prime Minister Narendra Modi on Tuesday announced demonetization of Rs 500 and 1000 currency notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency and corruption. In his televised address to the nation, Modi said people holding notes of Rs 500 and Rs 1000 can deposit the same in their bank and post office accounts from November 10 till December 30.
I warmly welcome this. It is a bold and necessary step to tackle the use of high denomination notes in corruption. And the immediate effect is vital: there was no chance to launder these notes before they ceased to have use. What is more, saying they have value when deposited might assist the tackling of tax evasion if details are then supplied by banks to tax authorities.
I would welcome the same action in the UK on £50 notes, for which I can think of no economic function, and elsewhere in the EU on high denomination notes (although I note moves have started there, but without the same shock effect).
This is a practical step to beat domestic corruption, tax evasion and market abuse. It is very likely to be effective. That is exactly the sort of reform that has to be welcomed.
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As someone who protects their privacy by not using cards as payment, among other things, I can’t understand why £50 notes are not more common. When I use a Deutsche Bank cash machine in Germany, it often gives me only €100 notes, but in the UK I can’t get anything bigger than a £20.
I understand the money laundering argument, but £50 is not even a particularly large round of drinks in London anymore. A tank of fuel or weekly food shop would also regularly be more.
I prefer that Visa and my bank don’t know every detail of my life traceable through transactions, where I drink my coffee, where I catch the train from, how much beer I drink etc.
As someone who has worked in a large bank, I know they are searching for ways to monetise the data they have already been gathering for years.
I can sacrifice your minor concerns on privacy to a fairer world
And yes, I know it is a trade off
As a logical progression, are you in favour of the removal of all cash in favour of card payments, because that concentrates power in a very small number of companies. Visa are rumoured to have over half of transactions by purchase volume.
I accept the risk from Visa and Mastercard – who I think should be tax transparent and aren’t
In practice the young do not use cash
Most would be amused that I do
This will happen then, like it or not
Erm, they are replacing them with new Rs500 and Rs2000 notes so actually putting out larger denominations of a new design and not getting rid of them.
Have you a link?
And the crack down still works – the existing notes have to go or be lost
http://timesofindia.indiatimes.com/india/long-queues-as-new-Rs-500-Rs-2000-notes-hit-market/listshow/55349702.cms
http://economictimes.indiatimes.com/industry/banking/finance/banking/the-new-rs-500-and-rs-2000-bank-notes-you-should-know-this/articleshow/55325873.cms
Noted
My hopes dashed….
Only a gesture
The 500 and 1000 rupee notes are worth about £6 and £12 and represent more than 80 per cent of the cash in circulation in what is largely a cash economy. Virtually no notice was given of their demonetarisation. There has been widespread social disruption. New 500 and 2000 rupee notes are available immediately as well as 100 rupee notes, but a replacement 1000 rupee note is ‘some months’ away. According to the finance minister “This one decision will change the way people spend and keep their money. It will take India towards a cashless economy, it doesn’t merely push the country in that direction, but significantly pushes it.” He also said, “One of the initial challenges before our government is that we have to re-establish our decision making power. And this government has taken tough decisions for the country’s benefit. We will continue to take risks in the national interest.” Where have we, and where will we, hear such admonitions for our own supposed benefit here in the west?
£6 is a lot more in India than here
And yes it is a lot of the cash in circulation
That is precisely why it as done
How long do we have to wait until a £50 note has the purchasing power of thirty dollars?
I don’t see a future where “all the fifties you can burn to boil a pot of coffee wouldn’t buy the coffee in the pot” but I do see this as a problem with its own solution.
Hopefully we don’t ‘solve’ it by printing hundred-pound notes.
Meanwhile, there’s more to cash than privacy: imagine a country where the interior ministry only allows party members to hold hard-currency bank deposits.
If you got rid of the 50 note, what would bankers use to snort cocaine now? The 20 doesn’t have the same effect!
Why not issue all notes with a use by date? It would reduce the height of farmers’ mattresses considerably. Having said that I have a lot of spare Euros from my last trip to France and I’m hanging on to them.