In this day and age, where you can pay your bills on a watch, it's getting harder to defend the use of cash which is more prone to use for illegal activities.

How many news reports do we need to see of police displaying piles of ill-gotten cash?

The anonymity of cash ensures those participating in the black economy remain under the radar. The proposed ban on cash transactions of $10,000 or more, with fines and jail terms for transgressions, will make it more difficult to operate in the black economy and is just one part of a broader strategy recommended by the Black Economy Taskforce.

But the proposed $10,000 limit doesn't go far enough and it should eventually be reduced, as envisaged by the Black Economy Taskforce. Other countries have much lower cash payment limits. A study by the European Commission indicates the most effective thresholds are much lower — around 1,000 euros ($1,630).

It's also unclear why there is such a strong reaction to the restriction on cash use.

Why not embrace the ease and speed of online financial transactions? Why carry more than $10,000 of cash when the downsides are so obvious — the threat of theft and potential personal harm, security costs, and the time and effort involved in counting, reconciling and banking it?

"Cash not accepted" signs are appearing in an increasing number of businesses. Even some leading charities now use "tap and give" terminals.

Black economy not a 'fair go'

At the risk of channelling Prime Minister Scott Morrison, many honest Australians, especially those in small business, are not getting a "fair go" because of the black economy.

The black economy, people who are operating entirely outside the tax system, is estimated at $50 billion or 3 per cent of GDP. This is larger than Australia's entire budget deficit, which varied from 1.9 per cent to 2.4 per cent of GDP between 2015 and 2017.

In our tap-and-go payment economy, the ATO and law-enforcement agencies still see businesses offering mates rates for cash, workers paid cash "under the table" while most of us have tax withheld each payday, and cashed-up individuals claiming government benefits.

Worried about the level of services in the state or territory where you live? GST collections are also undermined by the undisclosed cash transactions.

If, as a community, we want to reduce unfair competition, ensure all earnings are disclosed to the ATO, direct government assistance payments only to those who deserve a helping hand and bolster GST collections, then we need to actually do something about the black economy instead of just whinging about it.

Cash is going out of circulation

The time is right. Data from the Reserve Bank of Australia tells us the use of cash is rapidly diminishing, with the number of cash payments almost cut in half between 2007 and 2016, from 69 per cent to 37 per cent.

But despite this decrease in cash usage, you may be surprised to learn there has been an increase in cash storage — particularly high-denomination notes.

An extremely conservative RBA estimate is that $1 billion is warehoused by the black economy with a further $5 billion used for "operational purposes". That represents up to 8 per cent of bank notes in circulation.

Leaving aside the dodgy end of the spectrum, the people who use cash the most are — according to RBA research — those who reside in regional Australia, the elderly and poorer members of our community.

Setting the bar at $10,000 makes it unlikely the ban will adversely affect these groups. And for those living outside the big cities, the draft legislation has exemptions for exceptional circumstances with the potential to address the lack of internet coverage in some regions which can impede digital transfers.

Opponents of the $10,000 limit argue the proposal is Orwellian in that it bans the use of legitimate currency and exposes people to criminal sanctions. Some of the examples they use are wrong. For instance, the proposed law will not impact on the ability of business to deposit daily takings exceeding $10,000 in cash.

The opposing voices should outline their alternative models if they seriously want to tackle that part of the black economy that deals in cash. Would they prefer more red tape and transaction-based scrutiny instead? Or how about suspicious cash reports flooding into government agencies? Both seem more Orwellian than a simple, outright ban.

At the moment, the proposed ban will only apply when one of the parties to the transaction is doing so for business purposes.

Looking down the track, it could be simpler for Australians and enforcement agencies if the $10,000 cash payment limit applied to everyone, even for private transactions.

It's time for Australian taxpayers and businesses who legally operate within the tax system to rise up and help stamp out tax evasion and money laundering.

Susan Franks is a senior tax advocate for Chartered Accountants Australia and New Zealand.