The Federal Government said the GST would eliminate the black economy. But the truth is it's blacker than ever. William Birnbauer reports.
"How much for cash, mate?" is a question customarily asked with a knowing nod and a raised eyebrow. It is posed every day across Australia in negotiations over the cost of home renovations, backyard barbecues, fences, TV repairs, tiling, painting, tree lopping, even restaurant meals. A wink and the deal is done, usually for a 10 per cent discount.
The GST, introduced in July 2000, was supposed to maim, possibly kill, the cash economy. It hasn't. Today, the underground economy is worth up to $20.7 billion of potential tax revenue, and some experts say a big crackdown by the Australian Taxation Office has failed to stem the cash flow. circa 2003
Laurie is a bricklayer. He's not greedy and is cautious. Big jobs go through the books, but with smaller ones worth about $2000 to $3000, he'll take cash several times a year. "That's my little bonus to myself," he says.
Laurie says everybody is doing it. In fact, it's got to the stage that many of his building industry mates are knocking back cash jobs because they need to put money through the books to avoid scrutiny by the tax office.
Graeme, a builder, sees this all the time. "One of my subcontractors says at the moment he has that many offers for cash that he can't take them because there'd be no money left to run his business. He takes some, he doesn't take others. He reckons he loses jobs because he won't take cash."
The Australian Taxation Office (ATO) believes it is on track to achieve its target of collecting $2.6 billion from the black economy in the three years since the start of the goods and services tax in July, 2000.
But Cynthia Coleman, associate professor of taxation at the University of Sydney's business school, estimates small businesses each sweep at least $1000 under the till in cash each week. She met a home owner last year who had saved $7000 on a new kitchen by paying tradesmen in cash.
Certainly, anecdotal evidence of a flourishing cash economy abounds. All you need is a tradesman - just ask Mary, John, Daniel, and Michael.
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