The Turnbull Government’s Black Economy Taskforce is expected to release its final report in October 2017. While its interim report estimated the cost of the cash economy to be about $25 billion, the head of the taskforce, Michael Andrew, now believes that the black economy is worth at least $35 billion and potentially even up to $50 billion when activities such as money laundering and drug trafficking are taken into account.
Cash payments in sectors such as service industries were the focus of its initial recommendations, but the taskforce will also reportedly examine activities such as illegal gambling and black market cigarettes. From The Australian:
“Since I put the report out, when I was saying the black economy was worth $25bn, now I think it’s worth a minimum of $35bn and could be as much as $50bn. Briefings we have received on the illegal side of the black economy — the drug trade, money laundering — have led us to believe it is much larger than we first thought,’’ Mr Andrew told The Australian. Mr Andrew also heads the Board of Taxation, which advises the government on the development of tax policy.
“We have done a good job so far on the household component of the cash economy,” he said.
“In the final report, which goes to the government in October, we will focus closely on the illegal component of the black economy,’’ Mr Andrew added.
He said the taskforce would be working closely with government agencies such as the Department of Immigration and Border Security, the Australian Criminal Intelligence Commission, Austrac, Australian Federal Police and the tax office.
I can’t say I am surprised that Australia’s black economy has grown so large.
We’ve got a corrupted visa system that facilitates widespread exploitation of foreign workers, many of whom work for “cash-in-hand” below the minimum wage.
We’ve got loads of businesses like restaurants that only allow cash payments, thus enabling them to avoid reporting their entire sales proceeds to the ATO, or lower their annual turnover to avoid tax, including GST.
Meanwhile, Transparency International recently ranked Australia as having the weakest anti-money laundering laws in the Anglosphere, failing all 10 priority areas. This follows the Paris-based Financial Action Taskforce’s 2015 evaluation that Australian homes are a haven for laundered funds, particularly from China, as well as similar warnings from Austrac.
The end result is that the Government is losing significant taxation revenue, resulting in higher taxes being paid by everyone else (or lower services provided).
Let’s hope the Black Economy Taskforce closes down some of these rorts and restores integrity to the tax system.
