Black Economy in 2012

Atilathehun

I suppose it's a fair assumption, that the social welfare reductions in budget 2012, will push more and more people on social welfare into doing more nixers. Theoretically, the goverment assume more of these people will migrate into the workforce as opposed to staying on reduced SW.
But since there are no jobs in the first place, I guess the black economy will flourish like no other.

Permabear

This post has been deleted.

jester77

I always found this an interesting topic. What exactly is the definition of black economy, is it only where black money is involved? And how do they calculate what the market is worth?

If my car breaks down and my mechanic neighbour fixes it for me and in return I sort out a problem with his PC. Technically no money is exchanged, it is only neighbours helping each other out but if the neighbour was not a mechanic then I would have to take it to a garage to have looked at.

Or if I was unemployed and helped my farmer cousin making hay for a week during the summer. Technically I am working, and the cousin would be sorting out meals in return. If I wasn't unemployed he would have to pay someone, so should I not get dole for that week? But then again I am only helping out my cousin.

Godge

Atilathehun wrote: »

I suppose it's a fair assumption, that the social welfare reductions in budget 2012, will push more and more people on social welfare into doing more nixers. Theoretically, the goverment assume more of these people will migrate into the workforce as opposed to staying on reduced SW.
But since there are no jobs in the first place, I guess the black economy will flourish like no other.

If there are no jobs i.e. nobody needs any work to be done, how come the black economy will flourish?

antoobrien

jester77 wrote: »

I always found this an interesting topic. What exactly is the definition of black economy, is it only where black money is involved? And how do they calculate what the market is worth?

If my car breaks down and my mechanic neighbour fixes it for me and in return I sort out a problem with his PC. Technically no money is exchanged, it is only neighbours helping each other out but if the neighbour was not a mechanic then I would have to take it to a garage to have looked at.

Or if I was unemployed and helped my farmer cousin making hay for a week during the summer. Technically I am working, and the cousin would be sorting out meals in return. If I wasn't unemployed he would have to pay someone, so should I not get dole for that week? But then again I am only helping out my cousin.

It generally means that money changes hands, doing a favour wouldn't be examples of the black economy (which would be the case in the two examples given).

To take the second example, if you went around all the farms in the area getting paid for it and not reporting it, that would be the black economy at work.

Valmont

I was thinking about creating a thread on this topic! I left Ireland over one year ago and when I returned last August I found that many people had found work--"cash-in-hand" work to be precise. I think these employers should be applauded for providing much needed work to people without caving in to ridiculous minimum wage demands, labour regulations etc I know some people very close to me who have been literally dug out of a financial hole with jobs of this nature.

These people and these employers are really keeping things ticking for many people over during these hard times. Because God knows the government with its balls held by the unions, welfare dependents, and the EU are doing feck all to help anyone.

A question I would like to put to boards.ie is whether we should applaud or malign these individuals for not paying any tax on their earnings etc?

Park Royal

[QUOTE=Valmont;76116905

A question I would like to put to boards.ie is whether we should applaud or malign these individuals for not paying any tax on their earnings etc?[/QUOTE]

Guess you do what our leaders do, eg, go to Manchester and do an auld spoof talk, for a special group and they bung you several thousand Sterling in your trousers back pocket alongside your Irish Republic High Seal of Office ( Finance Minister by the way)....... which you got from the President of Ireland.....

then, then, God I dont have a Bank Account.....

all income should be declared .

murphaph

Valmont wrote: »

A question I would like to put to boards.ie is whether we should applaud or malign these individuals for not paying any tax on their earnings etc?

They should be maligned and I say that as someone who knows that the government wastes an awful lot of the tax revenue it takes in.

People should work for a better society through legal means. Tax evasion is grossly unfair on people who are "trapped" in (for example) the PAYE system. Tax evaders use the same (often shoddy) state services as the rest of us (possibly more so, given that many tax evaders are also benefit thieves).

Ireland is such an immature place. We have deep structural problems in our PS and government spending so let's evade tax rather than put the pressure on to reform the system.

What would happen if everyone evaded their taxes? Some life long benefit thieves and lazy council workers would get a right shock, but the country would fall assunder. We need a (reformed) public sector and we need to fund it with taxes.

Permabear

This post has been deleted.

V_Moth

Permabear wrote: »

This post had been deleted.

I think this is incredibly short-sighted and smacks of teenage rebellion. For every euro that is evaded in tax means a euro less for schools/hospitals/gardai and other vital services.

This would result in further cutbacks and the loss of already terribly stretched services.

But I guess this is just another thread to roll out your Libertarian hobby-horse

Permabear

This post has been deleted.

tara73

Permabear wrote: »

This post had been deleted.

yes, and they use the infrastructure, the hospitals, every service for their black dealings where the tax paying workers pay for.

tell me, how should that work, where will a country be heading where black economy is applauded/welcome?

I agree with poster murphaph here, it's a very immature and short sighted way of looking at the situation, there should be better and more functionable directions.

Pete_Cavan

Permabear wrote: »

This post had been deleted.

But the cash-in-hand economy only runs "smoothly and efficiently" because it is being subsidised by the state through various social welfare payments. Take away Jobseeker's Allowance/rent allowance/medical cards/state pension and you would soon find all these people would be happy enough to go back to paying taxes. That is why these people should not be applauded - they want all the benefits from society without contributing to it.

meglome

Valmont wrote: »

I was thinking about creating a thread on this topic! I left Ireland over one year ago and when I returned last August I found that many people had found work--"cash-in-hand" work to be precise. I think these employers should be applauded for providing much needed work to people without caving in to ridiculous minimum wage demands, labour regulations etc I know some people very close to me who have been literally dug out of a financial hole with jobs of this nature.

These people and these employers are really keeping things ticking for many people over during these hard times. Because God knows the government with its balls held by the unions, welfare dependents, and the EU are doing feck all to help anyone.

A question I would like to put to boards.ie is whether we should applaud or malign these individuals for not paying any tax on their earnings etc?

I know several people working cash in hand. On one level it bothers me as I'm fairly sure they are collecting social welfare too. But they have families so I couldn't bring myself to do anything about it.
The system is still broken IMO.

Permabear

This post has been deleted.

murphaph

Permabear wrote: »

This post had been deleted.

I dare say most people evading tax in 2011 were doing so in 2005.

skafish

Permabear wrote: »

This post had been deleted.

I agree with some of your poins re waste of money by the government.

However, for the country to exist, we all need basic services and facilitied..... eg roads, schools, hospitals etc.

These are paid for by taxes (direct and indirect) contributed by the public. At its simpleist, the amonut of money needed is divided by the number of people paying. So the more people paying, the smaller the amount each has to contribute.

SO the black economy, cash in hand tax evaders are costing the rest of us money.

And that is before you take into account that most of them are also stealing from the system through welfare fraud as well.

elaverty

There is were the problem is,,,,when the country was at full employment 6/7years ago,,and the exquecher was rakeing in PAYE/PRSI, I dont remember haveing to pay less tax,,all it meant was that the muppets running the country had more money to waste,and didnt mean that i had to pay less tax,,,,IMHO Its every man for himself now,and ill do what ever i have to do to support my family and fcuk the PC brigade,,,,

Valmont

An assumption has been slipped into the argument rather stealthily here: what is the evidence that anyone who works cash in hand is also on the dole? Unless you know someone doing specifically that or can point to some evidence suggesting that they majority are then I think the two need to stop being conflated.

Such is some people's allegiance to the Irish state that despite being held to ransom by a very well paid public sector and a bailed out banking sector, they still think we should divvy up all and any income for tax purposes in the name of the people. Looking at the mess the Irish government has made of this country, I thought cash-in-hand jobs were the one thing people would support.

"They'll probably blow and/or waste most of the money we give them, but that is our duty after all!"

Vizzy

Valmont wrote: »

An assumption has been slipped into the argument rather stealthily here: what is the evidence that anyone who works cash in hand is also on the dole? Unless you know someone doing specifically that or can point to some evidence suggesting that they majority are then I think the two need to stop being conflated.

Such is some people's allegiance to the Irish state that despite being held to ransom by a very well paid public sector and a bailed out banking sector, they still think we should divvy up all and any income for tax purposes in the name of the people. Looking at the mess the Irish government has made of this country, I thought cash-in-hand jobs were the one thing people would support.

"They'll probably blow and/or waste most of the money we give them, but that is our duty after all!"

So,if for instance you were a mechanic,carpenter etc,and fully compliant with tax and VAT,you would be happy enough to have a guy set up next door to you who only worked cash in hand and paid the odd bit of tax Yeah?

Sleepy

I know plenty of people that have nixers on the side of their PAYE employment: a few hours in a bar here and there, a bit of website work / computer maintenance, servicing a few cars, a few weekends out in the fields etc.

When the marginal rate on what you earn is over 50%, declaring any extra income you can generate is hardly incentivised...

We need cuts in public spending, not higher tax takes.

Permabear

This post has been deleted.

Nuttzz

the government needs to live within its means, in 2010 it took in the same amount of tax as in 2003, (€37 bn) but in that 7 years its spending as grown by €20bn.

The black economy exists in part because of stupidly high VAT rates, first thing anyone says to a tradesman these days is what is the cash price.

At present even a modest earner gives about 50% of their wages through direct and indirect tax to the government. I'm sure this would be an unpopular concept but I would like to see government services pared back to cover the base necessities like security and infrastructure and direct and indirect taxes slashed. I'd like to see the money people earn put into their pockets and they can decide what they want to spend it on in terms of health care, education and so on.

This would also help reduce the size of the black economy as there would be little to avoid, i.e. if VAT was 5% instead of 23% there is little incentive for a "cash price"

ardmacha

and as long as people are taking care of themselves, their communities, and their children I couldn't give a toss about their "responsibility" to fund the ruinous pursuits of Dáil Éireann

.

Since you obviously don't accept the basic principles of democratic society, perhaps you'll note that in other comments in case people think that you actually have the welfare of the country at heart.

Permabear

This post has been deleted.

ardmacha

Permabear wrote:

This post had been deleted.

The health of the national requires attention to the welfare of all citizens not just the public sector, although those in the PS are citizens too, a point which seems to be lost here.

That's not the point though. I accept that people should elect a government which can then levy taxes in the name of the people. You do not.

tara73

Permabear wrote: »

This post had been deleted.

yes, I see all this misery but I can think ahead as well. do you really think a rising black economy will solve this problems?
I don't think so. It will lead to consequently more or other problems.
this was my point in my last sentence post:
there should be better and more functionable directions. But for sure that means that the whole society needs to change to a more responsible, sustainable attitude, not only looking for the quick, big easy money anymore.

Permabear wrote: »

This post had been deleted.

?? who said that?
you haven't answered the question how your favoured model, the black economy, where how many in your opinion, 40-50-60-70-80 or even 100% should work..?? I'm very curious...

Valmont

ardmacha wrote: »

That's not the point though. I accept that people should elect a government which can then levy taxes in the name of the people. You do not.

You say in the name of the people but there is ample evidence to suggest that this should be changed to The Public Sector and The Banks. If people are willing to engage in some civil disobedience and keep their transactions away from the state, then all the power to them. That is what you call active democracy--acting with your wallet to express discontent.

The Irish state will hopefully have to wake up to the fact that if they continually rip off large swathes of the population in order to enrich others, people will simply start doing things to ensure their money is not expropriated in the first place. Indeed, the growing black economy is evidence of this.

ardmacha

You say in the name of the people but there is ample evidence to suggest that this should be changed to The Public Sector and The Banks.

As only about one quarter of government expenditure is on the public service it is not "all" about, or even mostly about the public service.

Permabear

This post has been deleted.

murphaph

Valmont wrote: »

You say in the name of the people but there is ample evidence to suggest that this should be changed to The Public Sector and The Banks. If people are willing to engage in some civil disobedience and keep their transactions away from the state, then all the power to them. That is what you call active democracy--acting with your wallet to express discontent.

The Irish state will hopefully have to wake up to the fact that if they continually rip off large swathes of the population in order to enrich others, people will simply start doing things to ensure their money is not expropriated in the first place. Indeed, the growing black economy is evidence of this.

To be quite honest the people with the most to be discontent about are in the weakest position wrt. witholding taxes as they are the middle class rump who are mostly PAYE and thus not in a position to withold tax due.

The people evading tax are the ones who always evaded tax by under declaring their income (tradesmen, taxi drivers, doctors, solicitors and other service providers where there is no supply chain paper trail to hint at tax evasion when it happens).

They are not doing it in protest at government policy or anything as noble as that. They are doing it simply to have more money. That's fine, but is it fair that these people have the same access to services as fully tax compliant PAYE employees or retail etc. self employed folks?

n97 mini

ardmacha wrote: »

As only about one quarter of government expenditure is on the public service it is not "all" about, or even mostly about the public service.

2010 govt income was €32bn. €17bn went on pay and pensions. That's 55% of all income.

As a portion of total spend (which is a false way to look at it, as a huge amount of the money being spent isn't actually ours), it's about 40%.

Co-incidentally the 2003 income was also €32bn, but expenditure on pay and pensions was only €13bn.

That's a 40% increase in expenditure on pay and pensions in only 7 years.

People feel resentful if they feel the govt isn't spending their money well. It makes it easier for them to justify in their own minds spending money in the black economy.

Count Dooku

ardmacha wrote: »

As only about one quarter of government expenditure is on the public service it is not "all" about, or even mostly about the public service.

PS pay only is about 32%
EXCHEQUER PAY AND PENSIONS BILL 2012 – NET
16,892,826 Bn
Gross current expenditure 2012
51.880 Bn
http://budget.gov.ie/budgets/2012/2012.aspx

n97 mini

It's also important to remember that even though the pay and pensions bill has increased since 2003, the level of services provisioned has decreased.

Permabear

This post has been deleted.

namenotavailablE

Quite simply, if everyone had the opportunity to evade paying taxes then society would collapse. Nobody likes paying taxes but it is a necessary cost of a civilised society. In the absence of a functioning government efficiently and fairly allocating resources to 'targeted spending channels' combined with a flourishing private sector generating wealth based on sustainable activities but paying tax on a portion of these gains, you end up with a country like Sierra Leone (in extremis) or Greece (not as extreme but economically in a hugely precarious condition).

Government services are costly and undoubtedly there is ample scope for efficiency (that however is not the point at issue, which is whether it is justifiable for some members of society to evade paying tax). We benefit (to varying degrees) from being citizens of a relatively stable democracy and open economy. We wouldn't attract the level of inward investment currently garnered if there wasn't a flexible, educated workforce, a legal framework to protect rights and responsibilities, a reasonable infrastructure to support development and so on. These things all cost money and if a section of society decides that they should not pay their due income tax to contribute to these facilities then the compliant taxpayers are left shouldering a higher burden.

Valmont

murphaph wrote: »

They are not doing it in protest at government policy or anything as noble as that. They are doing it simply to have more money. That's fine, but is it fair that these people have the same access to services as fully tax compliant PAYE employees or retail etc. self employed folks?

If we are going to talk of paying one's "fair" way...
Is it fair that welfare dependents have access to the same services as taxpayers? Is it fair that people paying high rates of tax have access to same services as those who pay little or no tax? Is it fair that the Public sector is getting a wage increase this year? If we are going to have a discussion on fairness and consistency, Ireland's tax and public expenditure system is not the place to start.

You say "fully compliant" which implies some sort of voluntary compliance. PAYE employees, if given half the chance would tell Daíl Eireann to feck right off just like cash-in-hand workers are doing now.

Park Royal

Really have no problem with your point of view, namenotavailabl, what grates

with me is the changed circumstances of the masses , compared to the

locked in a time warp few, who the masses are paying for , the privileged few

are not benched marked as regards their pensions against the masses

but are receiving huge "defined benefit" pensions when the masses are now

frying in the here and now.

I have no problem paying till it bleeds, to keep our Republic viable , but by

God I will not stop whinging till I see our so called Leaders , show leadership

and join the masses in this Republic's new reality,........their pensions and

salaries are of another reality now long gone......their likely pensions and

current salaries are not appropriate for this new reality...together with the

other 250 senior civil servants etc.

Permabear

This post has been deleted.

murphaph

Valmont wrote: »

Is it fair that welfare dependents have access to the same services as taxpayers?

Depends. Recently unemployed folks should indeed be supported by society (the rest of us) until they can find work again, with "incentives" put in place to make sure welfare doesn't become a way of life for them.

Benefit thieves and the terminally lazy...that's obviously NOT fair.

Valmont wrote: »

Is it fair that people paying high rates of tax have access to same services as those who pay little or no tax?

I actually favour a flat tax so yes, I do think it's a little unfair and feel people who pay little or no income tax should be brought into the tax net more, not that higher tax payers should remove themselves from it through the black economy.

Valmont wrote: »

Is it fair that the Public sector is getting a wage increase this year?

No. Is it fair that PAYE middle class taxpayers should foot the entire bill for this (ridiculous) increase while tax evaders in the black economy do not?

Valmont wrote: »

If we are going to have a discussion on fairness and consistency, Ireland's tax and public expenditure system is not the place to start.

You have to start somewhere in building a fairer country. Advocating tax evasion is not the place to start. Before long we'd be like Greece. Nobody invests in countries where tax evasion is rife. They are (rightly) seen as laughing stock countries.

Valmont wrote: »

You say "fully compliant" which implies some sort of voluntary compliance. PAYE employees, if given half the chance would tell Daíl Eireann to feck right off just like cash-in-hand workers are doing now.

Well, you might be right. It would be indicative of Ireland's inability as a nation to face up to the real causes of our problems: overly generous welfare and public sector pay and pensions, sh!te banking regulation and a fanatical desire to own one's own home.

These are the problems we need to address but how many average PAYE workers do you think actually contact their TDs to register their displeasure about PS increments and general waste in the PS? I do, but I would safely say that less than 1% of the citizenry has sent some form of communication about such matters to their TD in the last 1 months.

People talk about direct action, protests, tax evasion as a way to "let 'em know in Dail Eireann". How about people start by putting pen to feckin paper. If enough people did, the system would actually begin to reflect our wishes.

gerryo777

Pete_Cavan wrote: »

But the cash-in-hand economy only runs "smoothly and efficiently" because it is being subsidised by the state through various social welfare payments. Take away Jobseeker's Allowance/rent allowance/medical cards/state pension and you would soon find all these people would be happy enough to go back to paying taxes. That is why these people should not be applauded - they want all the benefits from society without contributing to it.

So do people who do some work in the 'black economy' just save any money made or do they spend it in the country? Just because there is no income tax paid on the money doesn't mean there's no tax gain from it. Remember every time you buy something a percentage of it goes to the state in taxes..

Permabear

This post has been deleted.

antoobrien

gerryo777 wrote: »

So do people who do some work in the 'black economy' just save any money made or do they spend it in the country? Just because there is no income tax paid on the money doesn't mean there's no tax gain from it. Remember every time you buy something a percentage of it goes to the state in taxes..

Yeah, but remember it's more than just the income tax that takes a hit from these activities. VAT and other taxes are reduced by these activities, giving that people selling nixers don't generally charge or pay vat, return accounts etc.

namenotavailablE

Are you saying that there was no civilized society in the United States before 1913?

I disagree that the first US Income Tax came in in 1913- it appears to be 1861 URL="http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History"]my source[/URL and was 3% on all incomes over $800. The rate you refer to did exist but was not the first income tax imposed in the United States.

I suspect that we are a more sophisticated society in many ways compared to that which existed 100 years ago but in any event I wasn't around in those days nor was I referring to those days. We are almost 100 years on from that particular date and must comply with the society that we now have.
To see the consequences of a breakdown in government which would arise from wholesale non-payment of income tax, I refer to the examples of the countries given in my previous post. In the long-term, it is a simply unsustainable position for society to expect a functioning democracy without funding it- surely this must be considered an immutable fact. Equally, by evading payment of income tax, the remaining compliant taxpayers are shouldering a heavier burden than would otherwise be the case.

Permabear

Permabear wrote: »

This post had been deleted.

........ people on SW living in subsidised housing earn a right few extra quid tax free

Permabear

This post has been deleted.

Mr.Micro

RoverJames wrote: »

........ people on SW living in subsidised housing earn a right few extra quid tax free

If life were so simple? I am sure it is not just SW people, if at all, but trades men and others up and down the country.

Mr.Micro

Mr.Micro wrote: »

If life were so simple? I am sure it is not just SW people, if at all, but trades men and others up and down the country.

Of course it's not just folk on SW but the comment I quoted was so single minded I thought it an idea to show the other side of the single minded coin.

I know no tradesmen selling pirate DVDs or cigarettes

namenotavailablE

@Permabear: you appear to be mixing your arguments. Initially, you applauded those who evade tax i.e. those who do not pay tax chargeable on their income/ gains. Now you are arguing about paying 'extortionate' levels of tax. Your argument has switched from non payment to the rate at which the tax is levied.

I 100% agree that if a tax is 'extortionate' (and I can only imagine the entertainment value in defining that term) then that it is not a legitimate charge. However, I am discussing the principle of paying versus not paying 'legitimate' tax i.e. taxes correctly due under the tax legislation.

Nobody likes paying- on that we presumably agree- but I repeat, those who do not pay their taxes INEVITABLY impose a greater burden on the rest of society and in extreme cases would lead to serious breakdowns in how society functions (imagine: no law & order enforcement/property rights trampled upon/ medical services unobtainable/ no education system etc)
The debate on what constitutes 'acceptable' level of taxes is a completely different debate and I suspect that you would never get agreement on an answer.

Once again, I repeat that if we all evaded payment of our taxes then society would experience a dramatic upheaval, likely leading to its effective collapse.

Permabear

This post has been deleted.

namenotavailablE

it's quite possible for "society" to function with dramatically lower rates of taxation than have prevailed in the West since the World Wars.

So long as taxpayers pay it this is indeed possible! That is my point too. Good we can agree on that.
The debate about the rate as I noted previously is a different issue. I also agree that a flat rate (or some variation thereof) has some attractions but is again a matter for another debate.