Cash is back.
The latest statistics from the Reserve Bank of Australia (ABS) reveal a cash revival.
Notes and coins, baby. They’re back on the streets.
Just look at this data. People are using money they can feel.
And it’s not just the tech-unsavvy people any more – people who have NFI about NFC.
This is an actual backlash – even among young people and rich people. People who used to be into electronic payments are now going back to a payment technology that is about 3000 years old.
Cold, hard, anonymous and ancient: cash.
Why?
You want some story about privacy in this era of tech omniscience? Rubbish.
You want a fable about how people like cash? That’s naive.
Who wants to go to an ATM and stab some filthy number pad with their index finger? You’re worrying about getting robbed from someone behind you, when in actual fact you’re getting robbed right in front of your face – by a machine that’s trying to charge you $3.75 to withdraw your own money.
Cash is a nightmare.
It’s fiddly and bulky.
On a windy day, if you drop it, it will blow away.
Tap-and-go has it beat in literally every way.
So what on earth could be pushing people back to cash? I’ll tell you.
What people like is cheap cigarettes.
What people like is getting paid $1500 for a job and not sharing any of that with the tax man.
The rebound in cash is going to be because of two main things.
1. The tobacco economy, which is mostly illegal, absolutely enormous, and runs on cash.
2. The rising cost of living. Anyone who gets paid by their clients prefers cash.
Hairdressers, plumbers, mechanics, cleaners. Cafes. All these places are struggling with the cost of doing business, while the business owner struggles with the cost of living.
I do not endorse tax fraud. I genuinely don’t.
My strong view is that taxes are the price we pay for a civilised society.
Governments should try to make them as low as possible, but people should obey the law.
I was taught that while dodging taxes was certainly doable for anyone with some cunning, one should definitely not dodge them.
Because it was a classless move, like leaving a restaurant without paying.
Of course, that’s an easier argument to make if you’re in a comfortable position.
I can’t help but notice that in this time, when everyone is being squeezed mercilessly, plenty of businesses offer a discount for cash.
Even after some recent tax cuts, the level of income tax has risen in inflation-adjusted terms.
Personal income tax collections are up 50 per cent in just the last five years, which means for most people, income tax is eating into your spending money much more than it used to.
The Australian Taxation Office (ATO) is not blind to the rise of cash and what people are up to.
They’ve noticed a rising “gap” in the amount of GST they collect.
“The latest estimates indicate an increase in the estimated net tax gap to $8.7 billion in 2023-24 (9.4 per cent of theoretical GST) up from $8.1 billion (9.1 per cent) in 2022–23,” it writes in its latest GST report.
The survey above is not the only data point we can find that hints at rising cash use.
ATM withdrawals are up.
Cash use peaked in 2008 and was slowly fading until 2020, when it slumped and then stabilised at a new low level for a year or two.
Then, in about 2023 when inflation got bad, that stable pattern turned to growth.
Honestly, cash works as a marker of economic instability and decline.
In a world where everyone had enough income even if they paid tax, cash would be out of fashion.
And in a world where the tobacco market wasn’t run by organised crime, people would be tapping their card to buy smokes at the supermarket.
We should hope cash falls again as a method of payment, because rising cash payments is a warning sign for our society.
Jason Murphy is an economist | @jasemurphy.bsky.social. He is the author of the book Incentivology
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