Posted on 05/08/2014 11:20:32 PM PDT by Olog-hai
For homeowners eager to save money on repairs, it’s a tempting proposition—you pay a tradesman cash-in-hand, he knocks a bit off the bill, and no questions are asked.
With the builder or plumber failing to declare their earnings and pay any tax, such secret payments are said to cost the economy £2 billion a year.
Now a survey suggests the black economy is booming, with more than four in five homeowners admitting they have paid a workman cash-in-hand. Not only that, but 30 percent have done it three times or more in the past year alone. …
(Excerpt) Read more at dailymail.co.uk ...
It benefits the informal(underground) economy but not the formal economy.
In the US, some small business do this but many will limit it because it detracts from building equity or value in the business, which detracts from the price that the business owner can sell the business for and/or makes it harder to borrow money to expand the business.
But for a business that relies mostly on labor for profit, rather than selling, it is more likely. Its harder to build "blue sky" in a labor dominated business.
During economic downturns the informal economy always expands as the formal economy contracts, because as revenue shrinks more temporarily shift to cash transactions to avoid taxes as a way of offsetting falling revenue. Then as the economy recovers, they will shift back to reported transaction.
Some places, like Mexico, the informal economy is much larger than the formal economy.
“Sounds like an honorable and fiscally sound tradition to me.”
On a fundamental level, there is something wrong with a society where this is somehow “illegal”.
” And unlike even 10 years ago, you can cheat now, by watching Youtube for just about any repair (something I refuse to do).”
This is NOT cheating - except that you are cheating yourself. The Internet is a tool, like any other - a wrench, a saw,a a ruler, or a textbook. I’ve done things that I’ve learned how to (successfully) do things that I couldn’t even have imagined doing 20 years ago with what I’ve read and seen on it.
Of course, you DO have to separate out the “garbage” from the gold...
Excellent point. That’s a subtlety you won’t find in this kind of story.
I disagree Antiyuppie, there is cheating going on, just not the type you are thinking of.
The real cheating occurs when you do the work yourself. This means that you aren’t paying another person, who will pay taxes on the income, and thus you are cheating the government out of it’s money.
Don’t forget barter. Sometimes to sweeten the deal, we let them keep any the cars they find when they mow the grass around the double wide.
The black economy might be the only thing keeping them from sinking into the ocean
How is it costing the economy anything? It’s probably helping
In Sweden there are always two prices. The black price and the white price.
We recently had a huge tree taken out and the rest of them trimmed. Licensed business quoted us $3300. Hubby said.....how much in $100 bills? $1600, because that meant NO PAPERWORK or taxes, etc. I am ok with that. Quite a difference. I took that $1800 savings and helped pay for new carpet. So 2 businesses got our money instead of just one.
That is correct. I'd bet that the £2 billion a year number is off by a factor of 5-10.
Eliminate the social welfare programs and the problem is solved.
Charity should be voluntary.
I can drop a tree in the woods if need be. When the tree is big or close to the house, professionals are worth their money...
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