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BBC reported the UK's Office for National Statistics considered for the first time the contribution of the hidden-economy to the GDP:
For the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming and only slightly less than book and newspaper publishers added together.
Illegal drugs and prostitution boosted the economy by £9.7bn equal to 0.7% of gross domestic product in 2009, according to the ONS's first official estimate.
A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.
Joe Grice, chief economic adviser at the ONS, said: "As economies develop and evolve, so do the statistics we use to measure them. These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.
"Here in the UK these reforms will help ONS to continue delivering the best possible economic statistics to inform key decisions in government and business."
Alan Clarke, a UK economist at Scotiabank, said that although the government would not feel the benefit of illegal work in terms of income tax take, there would be a spending boost.
"A drug dealer or prostitute won't necessarily pay tax on that £10bn, but the government will get tax receipts when they spend their income on a pimped up car or bling phone."
Keeping with the theme, I can "estimatedly project" two things from the above:
- if GDP is to include hidden-economy and beyond-damnd-liers have free reign to estimate it as they see fit, don't be surprised when the estimated rate of inflation and consequently your mortgage rate will vary in no relation with the as-reflected-by-your-payslip-economy
- if hidden-economy is officially recognized but still not taxed, where's the incentive for others to run their business in the open?
SN mates, what do you make of it?
(Score: 0) by Anonymous Coward on Saturday June 07 2014, @06:19PM
If that's the gist of the FAQ, I don't need to read it because it's only half the story. Sure, large well established businesses don't want to take that risk. But little guys will. For example, just because I can't register my car without paying property taxes on it doesn't stop my auto mechanic from giving me a significant discount for cash. There already is a big under-the-table economy and increasing the incentive to deal under the table sure ain't going to reduce it. In fact, dropping the requirement for income tax reporting will remove one of the biggest ways that tax cheats get caught because there won't be as many official records of money flow any more.
When the argument is that a sales tax is easy to collect, it is wishful thinking to ignore how the tax itself will change behavior.
(Score: 1) by frojack on Saturday June 07 2014, @06:55PM
What possible incentive is there for the Mechanic to accept ALL the risk to give you a discount for cash, when cash doesn't get taxed, doesn't have to be reported on income taxes, etc.
Cash, credit, check, its all the same to him. It isn't tracked. His state authorities might look at his books, but that is only to make sure he is turning in all the tax he collected.
So he skips charging you tax, pockets the money. Then what? He has to eat. He has rent to pay. He will SPEND his money. And that is where it gets taxed.
To say you don't have to read the FAQ and then turn right around and suggest something so ignorant as paying in cash to be untrackable is just beyond the pale. Read the Faq: http://www.fairtax.org/site/PageServer?pagename=FAQs [fairtax.org]
No, you are mistaken. I've always had this sig.