Isme calls on Government to tackle black economy

The Government has been urged to crackdown on a so-called ‘nixer culture’ which is hitting job creation and making it difficult for law-abiding businesses to survive.

Lobby group Isme suggests that illegitimate trading is helping contribute to a burgeoning black economy. It has said more must be done to inform consumers of the cost of illicit trade.

Isme estimates that the amount of money lost to the black economy amounts to at least 14 per cent of gross domestic product (GDP). This equates to in excess of €25 billion with an estimated lost to the exchequer of about €5 billion.

The organisation has called for a co-ordinated and collaborative approach by State agencies charged with investigating and eliminating black economy activity. It also wants to see stronger penalties imposed on those caught operating in the black economy and says a full-scale review of the social welfare system should be carried out to ensure it always pays to work. Isme has also urged the Government to introduce an awareness campaign to demonstrate the impact on State revenues and the provision of public services.

"As a nation we need a sea change in relation to tolerance of black market activities. Turning a blind eye to illegitimate trade is still part of our culture and must change to protect jobs and businesses. A national campaign to inform people of the cost of illicit trade is a priority. The campaign on insurance fraud was reasonably successful and a similar drive against the black market is called for," said Isme chief executive Mark Fielding.

“No longer can we tolerate the thriving ‘nixer culture’ where there has been a definite shift towards a ‘cash only’ shadow economy. We need a cultural shift that makes consumers understand the risks they are taking when hiring illegitimate traders, the impact their choices have on the local economy and the illegal activities money spent in the black economy often funds,” he added.

Isme said that while traditional methods of detection, enforcement and punishment have been used for generations, the overall effect is negligible. It added that tackling the general culture of acceptance must be the starting point for any new initiative.

“The level of black economy activities depends on the culture, incentives and opportunities to cheat. It is vital therefore that the Government, through its agencies, accurately monitor and police those rogue businesses and reduce the incentives to take business underground, by reviewing tax rates and the increase in public utility costs, deregulating the labour market and cutting red tape. It is no coincidence that countries with a relatively low tax wedge and fewer regulations have the smallest black economies,” said Mr Fielding.