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UK Adds Sex Industry and Drugs to GDP

posted by LaminatorX on Saturday June 07 2014, @04:14AM   Printer-friendly
from the Sudden-Outbreak-of-Honesty dept.

c0lo writes:

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:

  1. 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
  2. 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?

 
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  • (Score: 2) by hankwang on Sunday June 08 2014, @10:30AM

    by hankwang (100) on Sunday June 08 2014, @10:30AM (#52909) Homepage

    A VAT works very differently. It taxes every stage of production. It is much more complex and is typically hidden from the retail consumer.

    It is not complex at all. A business entitity charges VAT to its customers (business or consumer) and pays VAT to their suppliers. The difference goes to the state tax collection agency; if the difference is negative, the business receives the difference. Only the consumer at the end of the chain, who does not sell any goods or services, is a net payer of VAT; for all the entities inside the chain, VAT payments and receipts cancel out. For interstate business-to-business transactions, no VAT is charged at all.

    Disclosure: I file VAT statements every quarter.

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