SMALL BUSINESSES SOUND ALERT OVER BOOM IN BLACK ECONOMY

27 July 2012 No Comments by The Northern Standard

Small businesses in Co Monaghan and throughout the country are sufferng seriously because of the activities of the so-called ‘black economy’, according to a leading representative body.
ISME, the Irish Small & Medium Enterprises Association, has this week called on the Government to introduce tougher sanctions on those who avoid taxes on goods and services.
The Association warned that rogue traders, cash only merchants and racketeers are ‘killing’ tax compliant small businesses and costing the state billions in unpaid taxes.
According to ISME Chief Executive Mark Fielding, “While it is difficult to put an actual figure on the costs of the black economy, previous international estimates (in better times) suggest that in Ireland it amounts to 14% of GDP.
“ISME estimates would certainly put the figure at nearer to 16%, which would equate to €25bn this year and the figure could be much higher. The amount of lost taxes is conservatively estimated at €5bn, which would go a long way to reversing the current exchequer revenue shortfall.
“The ‘nixer’ culture, in particular, is very much alive and well and there has been a definite shift towards a ‘cash only’ shadow economy.
“This is particularly evident in the construction and maintenance sectors, where there are increased incidences of ‘jobs for cash’, completely undercutting legitimate companies, who in many instances report that potential clients are demanding that they pay ‘off the books’ to save VAT.”
Mr Fielding was also particularly critical of the social welfare system.
“The attractiveness of Ireland’s social welfare system is also contributing substantially to the ongoing problem. As the system is not designed to make it easy for people to take irregular temporary work, the effect is that individuals end up signing on and also working when they can, leading to millions in illegitimate dole claims.
“With rising costs and taxes, there’s also an incentive not to work, or to work but avoid tax. The system itself therefore offers a significant incentive to operate within the shadow economy, encouraging undisclosed employment without taxes or regulations, while claiming assistance from the state.
“It is also vital that there is an immediate clamp down on racketeering and rogue operators as evidenced by the level of seizures of contraband, and yet the massive amount of illegal goods that are available in the marketplace, which is costing the exchequer millions of euro per annum.
“The level of black or unobserved economy activities depends on the incentives and opportunities to cheat. It is vital that the …

Comments are closed.