Iconic rugby referee Nigel Owens is renowned for reminding players who might be tempted to give him some backchat that ‘this is not soccer’. It’s a great phrase and one that could be adapted for use for Ireland Inc. With absolutely no disrespect meant, our phrase of the week is ‘This is not Greece’, where an estimated quarter of their economy works on a cash-only basis. And it’s generally accepted by Greek economic commentators that the reason cash is king is to avoid getting involved with their pesky tax system.
We are Greece!
But shock, horror ‘This is Greece’, as we have a similar problem in Ireland. At ISME we estimate that the value of the growing black economy is €25 billion, or an estimated 14% of the nation’s GDP. And our ‘cash-only’ economy is costing the State an estimated €5 billion in taxes foregone – and that as they say, is an awful lot of hospital beds.
Medical specialists believe cash can cure many ills
Excuses given as to why we don’t like paying our taxes often mention how we tried to keep everything we could away from the British when they were running the show. But they left us alone almost a hundred years ago and surely our cultural compass must’ve turned a little since then? Not a bit of it. In the last week we were in a shop at one of our most visited State-run tourist attractions and it was cash only (American visitors must’ve found this terribly quaint!) while a visit to one of our top medical specialist, who charged a less than quaint €250 for a very brief consultation, meant a visit to the ATM as it was cash or cheque with cheque card (do they still have those) only?
Cash is the currency of paramilitary hoodlums
For commentators who don’t really understand business let us explain why cash kills. The vast, vast bulk of businesses are legitimate. They pay their taxes. However when the black economy gets to work it puts legitimate businesses out of business. How, for example, can a petrol station compete with lower priced diesel that has been laundered by hoodlum paramilitaries? How can a convenience store compete with pedlars of smuggled cigarettes selling tobacco door to door at a quarter of the price? How can a building contractor compete on price, if he’s being undercut on everything from unpaid VAT and paying no insurance or employer taxes for workers who are employed ‘on the lump’?
What does ISME want?
We’re looking for an awareness campaign showing how rogue traders destroy legitimate business and how non-payment of taxes affects the provision of public services.
We want much higher penalties plus the naming and shaming of black marketeers.
We want a review the social welfare system to ensure it is always pays to work and not act as a disincentive to taking up gainful employment, plus we’d like to see a stronger focus by the Department of Social Protection on checking the legitimacy of claims.