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ISME propose tax and social welfare amnesty for black market operators

The Irish Small Firm and Medium Enterprises Association believes that the temporary amnesty would help individuals to legitimise their “hidden economy” tax/earnings status.

Image: Company share price information via Shutterstock

THE ISME IS calling for government to introduce a tax and social welfare amnesty for those who are employed in Ireland’s black market.

The Irish Small Firm and Medium Enterprises Association (ISME) made their call when they met with the Joint Oireachtas Committee on Jobs, Enterprise & Innovation, believing that the amnesty would allow individuals to legitimise their “hidden economy” tax/earnings status.

Following this, the ISME want government to adopt a  zero tolerance approach, along with tougher sanctions and harsher penalties for those who avoid taxes on goods and services.

ISME chief executive Mark Fielding said that the group believe that the amount of taxes lost to the black economy is “conservatively estimated at €5bn, which would go a long way to reversing the current exchequer revenue shortfall.”

“The ‘nixer’ culture, in particular, is very much alive and well and there has been a definite shift towards a ‘cash only’ shadow economy,” he said.

This is particularly evident in the construction and maintenance sectors, where there are increased incidences of ‘jobs for cash’, completely undercutting legitimate companies, who in many instances report that potential clients are demanding that they pay ‘off the books’ to save VAT.

The concerns of the ISME echo those of the Small Firms Association, who also believe that Ireland’s black market continues to pose “a very serious threat to the survival of many registered tax compliant businesses.”

Twelve point plan

The ISME yesterday presented its twelve point plan to the joint committee, which they hope will help end Ireland’d black market economy. In addition to the amnesty, it also includes:

  • The development of an awareness/advertising campaign.
  • A radical review of the current taxation and social welfare system to reduce the “tax wedge” that those in legitimate employment are subject to.
  • The provision of tax incentives to home owners who use tax compliant, verifiable trades people.
  • The introduction of container scanners at Irish ports where the volume of traffic justifies the required investment.
  • The introduction of harsher judicial penalties for those caught operating in the black economy.
  • A simplification of the often “onerous and complex” paperwork required to start a business.

“The main challenge still is to bring shadow economy activities into the official economy, so that goods and services are still produced and provided at an economic cost while the government gets additional taxes and social security contributions,” said Fielding.

Read: SFA warn of €6 billion cost of black economy, urge government action >

About the author:

Paul Hyland

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