It is accepted that there is a certain amount of Black Economy activity in every country but it is during a recession that it is at its highest.

A recent report (August 2012) compiled by EPS Consulting for Retail Ireland estimated that the Black Economy was costing the Exchequer c. €1 billion per annum in lost revenues and taxes. A press release by ISME in November 2009 estimated that the Black Economy was worth €461m per week and that it was costing the exchequer €4.8 billion per annum in lost revenues.

I would argue that as a result of the harsh spending cuts and tax increases of the last 5 budgets since the economic crisis started in September 2008 that this figure is probably somewhere in the region of €3 billion per annum in lost revenue. I would also suggest that this loss to the Exchequer will continue to rise as the austerity measures agreed with the Troika continue being implemented over the next 3 years.

To put this figure in context, the Black Economy (€3bn pa) is equivalent to the recent Budget 2013 spending cuts and tax increases of €3.5 billion introduced by the Ministers of Finance (Michael Noonan) and Public Expenditure & Reform (Brendan Howlin) last December. It is estimated that a further adjustment package (taxes & spending cuts) of €8.6 billion will be required over the forthcoming three year period if the annual deficit targets (3% of GDP) are to be achieved by 2015. The annual deficit in the Irish exchequer in 2012 was €15 billion (8% of GDP).

The amount of zeros involved above can sometimes be dizzying and this has led to a sense of helplessness by the general public over the last 5 years as budget after budget took more and more of our hard earned cash out of our pockets.

There is a way that each of us can assist in Ireland’s recovery, firstly by understanding what is involved in the black economy and secondly by then deciding not to support it. In some cases this may involve having to pay a bit more for certain items but this is a decision that we will all have to make when deciding whether or not to support ‘Team Ireland’.

I have included below some examples of Black Economy activities:

• Under declaration/omission of income - Foxers, Nixers or whatever working ‘for cash’ is called in your part of the country
• Fuel Laundering
• Illegal Tobacco
• Illicit Alcohol
• Counterfeit Products and Piracy
• Counterfeit Medicines
• Digital Piracy
• Shoplifting and Theft
• Social Welfare Fraud i.e.'working without paying income tax or social insurance, while simultaneously receiving social welfare payments.

The above are bad value for the consumer (no refund policy/customer care dept. for counterfeit goods and services!) and in some cases (tobacco, alcohol and medicine’s) can lead to serious health risks to individuals.  This was highlighted in a 3 part series last year called ‘Black Market Ireland’ that was produced for TV3, which is definitely worth a watch if you have the time.

Black market activity and criminality also threatens jobs in the Irish Economy as counterfeit sales, contraband goods and smuggling activities are on the rise and the trend is continuing.

It is also leading to the closure of genuine tax compliant businesses who cannot compete with non-tax compliant competitors who don’t pay taxes on their income earned or return PAYE/PRSI to revenue on the wages that they are paying to their ‘off the books’ employees.

Below are some of the ways we as individuals can stamp out black market activity and measures that the government could or are introducing to combat this rampant practice:

• A consumer awareness campaign (TV, radio & newspaper ad’s) similar to that which was implemented for insurance fraud over the last number of years i.e. those involved in the Black Market are taking money from your pocket!
• Only use a tax registered and compliant business when purchasing business/personal goods and services.
• Always insist on a quote and ensure that a vat invoice is produced before the product/service is delivered and before payment is made.
• Rebates by the exchequer in relation to the purchase of diesel for the farming/agri and haulage industries.
• Rebates/grants for home improvements and renovations.
• Investment of additional resources into detecting cigarette, alcohol, clothing and other smuggling.
• In addition, street markets are a major source of illegally sold goods and they need to be policed by both Revenue and the Gardai.
• There should be zero tolerance even for the most minor of crimes. In addition, penalties should be more commensurate to the scale of the crime. Penalties and fines could be repaid to the exchequer by reducing an individual’s future tax credits/allowances or social welfare benefits.
• More resources need to be (re)deployed towards enforcement activities.
• Whistle-blowing - Revenue are encouraging tax payers to make telephone calls to their local tax office in relation to tip offs for illegal activities and they insist that any information will be treated in the strictest confidence and anonymously if that individual does not wish to provide their contact details.

In summary it is up to each individual to make a stand against the Black Economy by making a conscious decision of where they are purchasing their goods and services.

As outlined above for every €1 that is spent in the Black economy the government will take a portion of this amount from each of us on Budget day by increased taxes or reduced public services due to spending cuts this year and every year thereafter.