The Black Economy

The_Honeybadger

Just wondering what peoples experiences are of the black economy, some politicians have been talking about this lately and they want to clamp down on it (I think George Lee mentioned it on Frontline) I was supplementing my income from a sideline job for a few years and paying no tax but had to eventually declare it as I became too busy in the job and was afraid of being caught (I'm sure I would have been eventually). How real is this problem? Do you begrudge someone making a few bob extra and not declaring it? We all know of people who work on the side (plumbers, electricians, musicians, teachers doing grinds etc) but I am interested to know what people think with regards to this.

ttoppcat

I have off recent joined the "black economy". Not happy about doing it but I lost my job a few months ago and it looks like it'll be at least the summer before jobs in my sector (Youth and Community) start coming up.
The One Parent Family income was not covering all my bills (plus i'm slightly in debt) so i've got a job delivering food two nights a week.
I dont feel proud of it, and its not something i plan to do long term.

max 73

the black economy was and always will be around.....it just becomes more prevelant during bad times (like now) its basic barganing - if someone can offer a cheaper price for good quality work and i pay them cash then its ok by me, its all about value/cost - the govt need to have a look at helping out small businesses / sole traders in terms of reduced vat, rates etc in order to try to eliminate the black economy but that said that wont happen!!!

The_Honeybadger

ttoppcat wrote: »

I have off recent joined the "black economy". Not happy about doing it but I lost my job a few months ago and it looks like it'll be at least the summer before jobs in my sector (Youth and Community) start coming up.
The One Parent Family income was not covering all my bills (plus i'm slightly in debt) so i've got a job delivering food two nights a week.
I dont feel proud of it, and its not something i plan to do long term.

Funny I actually work in that sector at the moment, my contract is up for renewal in April and I'm afraid it doesn't look good for me. That sector does alot of good but unfortunately it doesn't generate any income and is a soft target for government cuts. I had never done it before but must say I'm loving the work, would love to build a .career in the sector but like I said it doesn't look likely as the governments will probably cut funding on an ongoing basis in this sector. Good luck with the jobhunting hope it works out for you.

nesf

The Black Economy will always be alive and well so long as we use cash rather than some electronic payments system for everything (i.e. the latter makes it easy to track where people spend their money etc). Most tradespeople I've known will happily take on small jobs for a smaller fee paid in cash, most people I know don't think anything is wrong in doing this since "it's only a few quid". I've no data to back it up but I'd hazard that the majority of the black economy is dealing with small payments for side work that's both difficult to spot and not worth pursuing on the part of the Revenue (i.e. the Revenue will spend more on wages catching you out than they'll get back in unpaid taxes so there's little appetite for investigating this kind of activity).


Things are quite different, and much more serious, when we're looking at cigarette smuggling and similar and organised crime starts to come into the picture but this isn't a factor in the kind of nixer work that goes on in houses all over the country.

simplistic

To say that its wrong or immoral to work in the black economy is to say that it is wrong to hide the fruits of your labour from a thief.

Liam Byrne

I used to have a different view on this, but if Ahern doesn't pay tax on his fictional book (while using my cash to promote it, via his car and his wages) then I'm not going to begrudge a normal decent person a few quid.

And while I've no problem paying my way via tax to contribute to general public services, Lenihan's flushing the tax down the Anglo toilet, O'Donoghue swanning around like a king and idiotic Financial Regulators getting paid off for not doing their job have me wondering how much of it does actually go to providing services.

SLUSK

mickeyk wrote: »

Just wondering what peoples experiences are of the black economy, some politicians have been talking about this lately and they want to clamp down on it (I think George Lee mentioned it on Frontline) I was supplementing my income from a sideline job for a few years and paying no tax but had to eventually declare it as I became too busy in the job and was afraid of being caught (I'm sure I would have been eventually). How real is this problem? Do you begrudge someone making a few bob extra and not declaring it? We all know of people who work on the side (plumbers, electricians, musicians, teachers doing grinds etc) but I am interested to know what people think with regards to this.

I have worked in cash in hand jobs while fruit picking and labouring in New Zealand and Australia.

Berthram

This 2000 paper below estimates the black economy to be about 13-23% of GDP for Ireland.

http://docs.google.com/viewer?a=v&q=cache:OdKx8_DNt5QJ:www.econ.jku.at/members/Schneider/files/publications/JEL.pdf+Shadow+Economies:+Size,+Causes,+and+Consequences&hl=en&gl=ie&pid=bl&srcid=ADGEESjMJPvlSeqB5-y2tvjs95SGTPfgGR9vuZw1i6-XZjCvBcdZyRoRL31og1y1Tes487_Somz8oXZMpmFMKHk9zFww8CiMnhU2dxYyu4kviYaAqauSg4Ea8buTv6Kxz7j2IOSBj-b8&sig=AHIEtbTy3ISRlorpJ_WonX4o8lKayQdirQ

ttoppcat

mickeyk wrote: »

Funny I actually work in that sector at the moment, my contract is up for renewal in April and I'm afraid it doesn't look good for me. That sector does alot of good but unfortunately it doesn't generate any income and is a soft target for government cuts. I had never done it before but must say I'm loving the work, would love to build a .career in the sector but like I said it doesn't look likely as the governments will probably cut funding on an ongoing basis in this sector. Good luck with the jobhunting hope it works out for you.

Its great work and I love it, but yeah very unstable (even through the boom years) .Here;s hoping your contract gets renewed:)

Amhran Nua

nesf wrote: »

Most tradespeople I've known will happily take on small jobs for a smaller fee paid in cash, most people I know don't think anything is wrong in doing this since "it's only a few quid".

Then again I've run into a few builders who charged their real price in cash and if you wanted a receipt they'd slap a surcharge plus VAT in there.

doc_17

A teacher giving grinds could be considered as part of the black economy? Right they are not paying tax on it. Kind of like an artists exemption!

MI5

Be aware REACH is watching over the small fish now!!
Revenue going around TESCO etc, looking at notice boards to see who is advertising services, etc,.

http://www.independent.ie/business/irish/paye-workers-to-be-targeted-after-tax-take-dries-up-2002711.html


PAYE workers to be targeted after tax take dries up



By Emmet Oliver Deputy Business Editor
Thursday January 07 2010

THE Revenue Commissioners are planning to use their hi-tech tax profiling system on 2.2 million ordinary PAYE taxpayers as the tax take from wealthier people dries up.
The Revenue are now looking at using the system on those with second businesses or "nixers", or those who've made large purchases which appear unusual considering their income.
The REAP system (known officially as risk evaluation, analysis and profiling) has to date been used on companies and the self-employed. It pieces together disparate pieces of information, some of it from third parties, and then pinpoints those who need to be audited or hit with a tax claim.
The depth of the recession has reduced the annual tax take to 2003 levels as capital gains tax, stamp duty and even VAT have dried up. In answers to questions from the Data Protection Commissioner, the Revenue admitted it was now time to change how the REAP system was used.
"Given the present economic climate . . . the use of REAP may be extended to evaluate risk across the PAYE sector. This would involve REAP examining some 2.2 million cases."
The Revenue would track anyone with assets beyond their family home. For example, if someone sold something that triggered capital gains tax, that would prompt an audit or request for extra information.

Liable
"Such persons may be liable for additional tax liabilities," a spokesperson said.
The REAP system, essentially a computer programme, first came into operation in 2007 and is only accessible to senior tax inspectors with a password. All four Dublin regions are allowed to access the system.
Taxpayers examined under the system are given a score which shows the level of risk they may owe the revenue additional money. Those with higher scores are given priority for audit or a tax claim.
On Tuesday, the Department of Finance revealed the tax take for 2009 came to €33bn, down 20pc on the previous year. All tax areas shrank in 2009, with capital gains tax the worst faller with a 62pc plunge in returns. The area which fell the least was income tax which dropped by 10.2pc, after the Government implemented a series of income levies.
Recently the Irish Independent revealed that revenue officials were cracking down on people offering piano lessons, grinds and other "nixers" to ensure tax is being paid.
Inspectors are scouring noticeboards at shops and taking down details of people advertising services.
The actions are part of a Revenue campaign to ensure we do not return to 1980s-style tax evasion.
- Emmet Oliver Deputy Business Editor
Irish Independent

AARRRGH

Amhran Nua wrote: »

Then again I've run into a few builders who charged their real price in cash and if you wanted a receipt they'd slap a surcharge plus VAT in there.

I've often wondered do they just pocket the VAT.

murphaph

simplistic wrote: »

To say that its wrong or immoral to work in the black economy is to say that it is wrong to hide the fruits of your labour from a thief.

...and then using roads, footpaths, or drinking water from a tap is in turn theft from the rest of tax compliant society. There are lots of things wrong with Ireland and the way it's governed, but advocating that everyone start working outside the tax system is not a solution, inb fact it would lead to an even faster collapse of the country.

helimachoptor

I've done bits and pieces, most in education giving grinds to JC,LC and some college students. I've also worked for the last 12 years.

Currently back in college myself but i'd say come September I'm going to go back to doing grinds for the LC and JC.

Even if I gave 3 hours a week @ 30 per hour thats a nice bit of cash I can spend during the month.

The OH will probably start doing some aswell from now onwards and do a good few hours per week.

ConsiderThis

murphaph wrote: »

...and then using roads, footpaths, or drinking water from a tap is in turn theft from the rest of tax compliant society. There are lots of things wrong with Ireland and the way it's governed, but advocating that everyone start working outside the tax system is not a solution, inb fact it would lead to an even faster collapse of the country.

It's interesting to speculate what the country would be like if the direct tax system was abolished and the country relied on indirect taxes to run itself. In the view of some, the country is beyond repair and is being run by mainly be a cadre of self serving politicians who have little or no long term strategic view. They are bedevilled by short termism, and put their own interests above those of the country.

I'm sure there is a conspiracy theorist somewhere who believes that its all a plan for us to drive ourselves into financial ruin as a country, only to be taken over lock stick and barrel by the EU at some stage in the future.

Sleepy

It's certainly evident with respect to the tobacco industry, even if it's often done in a "legal" fashion. Most smokers I know either get their cigarettes abroad, online, from friends or relatives travelling abroad or from the 'polish bloke down the local'.

Also very noticeable where alcohol is concerned. I'd often pick up a bottle of Morgan's Spiced when coming through a UK airport for £13/£14 rather than paying €28 for the same bottle in a supermarket at home. I'd love to see figures on how much of the shopping done in the North relates to alcohol too.

old boy

as my pension is after being cut, less disposable income to use, i have no choice but to get people to work for cash. even so it is hard to get any one to do easy tasks for 10 euro per hour plus food, what do people in your area charge, also what rate do you offer.

nesf

AARRRGH wrote: »

I've often wondered do they just pocket the VAT.

Easy to do if you pay in cash, quite risky to do if you pay by cheque or another means where there's a paper trail. Also depends on the formality of the invoice, if it's done properly then there'll be an invoice number that will be lacking VAT accounted for if they get audited which would be risky.

lauralee28

doc_17 wrote: »

A teacher giving grinds could be considered as part of the black economy? Right they are not paying tax on it. Kind of like an artists exemption!

True! I give grinds and lots of them

AARRRGH

lauralee28 wrote: »

True! I give grinds and lots of them

I don't know why but I found that sexy!

dvpower

ttoppcat wrote: »

I have off recent joined the "black economy". Not happy about doing it but I lost my job a few months ago and it looks like it'll be at least the summer before jobs in my sector (Youth and Community) start coming up.
The One Parent Family income was not covering all my bills (plus i'm slightly in debt) so i've got a job delivering food two nights a week.
I dont feel proud of it, and its not something i plan to do long term.

FYI, the One Parent Family allowance allows you to have some earnings without loosing anything (tax liabilities on your earnings is another thing 'though).

johnnyskeleton

There are two problems:

1) Irish people tend not to associate the state's money as their tax money (and therefore do not see how their tax pays for public services)

2) there is so much black-marketeering and shenanigans at the top that it permeates the whole economy, all the way down to the waitress who doesn't declare her tips as income.

Because of this, most people seem to see the black economy as the lowest form of wrong along with the likes of social welfare fraud i.e. "it is stealing from the government and sure they're all at it anyway so why not me?". Most people IMO see it as less wrong than say petty theft or breaches of traffic law because they don't see that everyone is the victim in the black economy in the same way that they see that the shopowner or other road users are the victims of shoplifting/speeding.

Even people who do recognise this feel justified on the basis that "Well, the taximan doesn't declare all his income, the plumber pockets the cash in hand job, the solicitor writes off the champagne reception as a legitimate business expense and the neighbour is claiming single parent but living with her fella, so if I buy cheap cigarettes or import an ipod from the US on the sly, I'm only just rebalancing things so that I get what everyone else is getting."

They say one bad apple spoils the bunch. When the bad apple is also the, ahem, leader of the other apples, then corruption becomes rampant.

ei.sdraob

Theres one sure way to kill the black economy (but it would have huge privacy implications)

make Revenue publish the declared income of everyone in an open database/site

and offer a small reward for anyone who finds "irregularities"

sceptre

doc_17 wrote: »

A teacher giving grinds could be considered as part of the black economy? Right they are not paying tax on it.

Assuming it's not declared to the Revenue Commissioners, that's part of the black economy.

Kind of like an artists exemption!

That isn't part of the black economy. Clue is very much in the title:)

ConsiderThis

Can anyone blame some who, as the result of a wholly incompetent and avaricious government, find themselves paying hige tax rates, high national insurance rates and additionaly levies on income, together with some of the highest direct taxes in Europe, seeking to supplement their whats left of their income, while those who caused the problem, (the government) swans about in 2010 mercedes cars ( paid for by the same impoverished taxpayers) with round the clock chauffeurs ( also paid for by the same taxpayers) with salaries, expenses and perks higher than almost any politicians elsewhere in the world?

There is such a thing as natural justice, and there appears to be a growing feeling that the taxpayers in this country are suckers. the problem is we keep voting them back in, such fools are we.

Amhran Nua

ei.sdraob wrote: »

Theres one sure way to kill the black economy (but it would have huge privacy implications)

make Revenue publish the declared income of everyone in an open database/site

and offer a small reward for anyone who finds "irregularities"

They've already gotten access to any bank account if they want it, and the nice REAP system to sift the numbers for irregularities. Oddly enough, they don't need much help.

ei.sdraob

Amhran Nua wrote: »

They've already gotten access to any bank account if they want it, and the nice REAP system to sift the numbers for irregularities. Oddly enough, they don't need much help.

Oh i know i wouldn't not support such an idea, i just floated it there into the thread to make people think

the problem with beuracracies is that if they do their job to well, they would be out of a job eventually, and they cant have that happen can they? the unions need to kept happy

PLIIM

I dont even smokeanymore. Yet whenever i am in eastern Europe i bring back a case load of fags.
Customs found them once and i said they were for personal use for me and the mrs, who doesnt smoke either. I then sell them to the lads at work.
Always pays for my holidays.
Do i feel guilty? - No.

uklid

When I studdied economics (back in the sixties) the lecturer - a Dr Smith used to say that the black economy accounted for 30% of the total, and that the country could not survive without it.
He further maintained that it was not morally wrong to avoid paying up to 30% of ones taxes, because that portion would not be dew if everyone paid their full share - i.e. if there was no black economy.