Back to Black

It’s rampant. From smuggling crooks to cooking books, the black economy has grown exponentially since that fateful September morning in 2008, when the beginning of the crisis hit.

The country as a whole is suffering from people turning to the black economy. It is a very real drain on the Government and it is damaging businesses trying to turn an honest living. Various estimates have put losses in excise duties and VAT at the €5 billion mark. The country is losing up to 16% annually from due to the activities of those engaged in the black market.
 

It would appear that two of the biggest threats to the legitimate economy are the house repair/maintenance market and the smuggling of cigarettes.
 

Deputy Chief Executive of Chambers Ireland, Sean Murphy, has commented on the difficulty of measuring these operations. He has echoed the observations of others that the cigarette smuggling alone is costing Ireland €500 million in revenue. He went on to comment on the repairs industry also.

“There are distinct areas where the black economy is pretty strong. In the repair and maintenance and improvements sector of house construction and house maintenance, it’s a big challenge.”

“There are lots of unmarked vans working the streets – they have to be watched and clamped down upon for legitimate businesses trying to pay their way.”
 

It is perfectly understandable that consumers and providers don’t mind working the black economy, in what are clearly hard times for all. The consumer pays less for the job and the provider gets cash in hand without the “hassle” of VAT. In essence, it is like the transaction never happened.
 

However, fundamental worries exist with this under-the –table method. Are they insured? Are they licensed and bonded? Health and safety? If something goes wrong, will you have a comeback? These are the risks you take.
 

Ireland is currently in what seems like a monogamous relationship with cash, something that is not good for business. It can’t be traced and costs to keep safe. We are slowly but surely moving away from this dependency on cash, if recent figures from the Central Statistics Office are to go on. But, still, over €22 billion was withdrawn from ATM’s last year, showing that we are still somewhat faithful to our first love.
 

“It is essential that Irish consumers continue to take the lead from their European counterparts in switching to more efficient payment methods as this will positively impact on Ireland’s economic competitiveness”, according to Pat McLoughlin, chief executive of the Irish Payment Services Organisation (IPSO).
 

The black economy is none more prevalent than in the social welfare system. Our system is set up that if a person in receipt of benefits is offered short-term work, it is a lot of trouble signing back on. As such, they stay signing and take the cash in hand. The Government, therefore, loses potential income tax and is paying social welfare it doesn’t need to be paying.
 

Take for instance, someone going to work in a hotel for the Christmas season for eight weeks doing four days a week. They sign off and do their job but they lose all their entitlements and their dole, which is often more than they get for working.
 

“The seasonal sector, such as the catering or the hotel industry – it’s a big problem. If you want to get people to go from a three-day week to a five-day week, we need to change the appropriate incentives in that regard, as there are a lot of benefits to going up to a five-day week, but the cost can be a loss to your medical card or rent allowance so that has to be restructured that makes work pay”, Murphy adds.
 

“People are rational and make rational decisions. They optimise what their best options are, so we need to make sure the rational decision the pro-work decision.”
 

Employers can’t even get some of their workers back off the three-day scheme they have implemented because working five days is less money than three days plus benefits.
 

We are losing money hand over fist in this country. We are not so naive to think we will ever totally eradicate black market dealings in our country. However, with electronic payments leaving digital fingerprints, it is a step in the right direction.

 We need to create an environment where working five days a week is worthwhile and not having the social welfare system being sucked dry. But we must be mindful, that where there’s a will, there’s a way. Ways will be found to evade tax, cheat the system and blur traceability until the end of days. In these tough times, many are going back to black to stay in the black.

forward this email to a friend

Black market hitting the local economy

It seems everywhere we turn, we run into the black market. Within the last couple of years, however, the local economy has become flooded with black market goods. The particular scourge: illegal cigarettes.

We only need to look at last year’s figures from a study carried out by the lobby group, Retailers Against Smuggling (RAS), to see the national slide into black market retailing.
 

65% of Irish shops are fully aware of black market goods being sold in their area. 60% have been approached to sell such contraband in store. Retailers are terrified that, if trends like this continue, they will face substantial losses and possible closure of their business.
 

With the abundance of cheap cigarettes coming into the country, it is hard for legitimate retailers to turn a decent profit.
We saw in a recent TV3 special the dangers and the inherent risks that come from these illegal cigarettes. Millions upon millions of euro is being lost in duty to the Irish Exchequer every year with the illegal transportation and importation of such goods.
 

We have legitimate cigarettes coming into the country without the proper duty being paid but we also have a much more dangerous alternative. There are cigarettes being imported that not only have elevated levels of tar and carcinogens but also contain other dangerous chemicals not found in regular cigarettes.
 

Both are being sold at knock down prices all over the country and while customers think they are getting their cigarettes at a better price, they are at best fuelling a lucrative illegal enterprise and at worst, smoking cigarettes which have lethal levels of toxins they don’t know are present in these dodgy cigarettes.
 

We need to cut the cancer out of the illegal cigarette trade because it is crippling our finances and it is crippling our businesses.

 

 

 

forward this email to a friend

Mitchell & Son Wine Merchants CHQ are purveyors of fine quality wines from around the world. With over 200 years of tradition under their belt, their reputation for quality produce is unsurpassable. Add to that their frequent trips to the best vineyards for regular customers and a wine Guild for avid connoisseurs, make Mitchell & Son your one-stop shop for quality wines. 

Mitchell & Son Wine Merchants CHQ are pleased to offer a 10% discount on wine to staff members of companies selected by the Quality Business Alliance located in the IFSC area. 
Please note that this discount excludes promotional products and spirits.

Staff members will need to produce company identification at the time of purchase if requested.

This offer is available in the CHQ store only.

forward this email to a friend

Ask the Expert

Q. I am looking into using a market research company. I am currently working for a small software company and we have a few potential companies on our list. Is there a good way to assess these companies so we can decide with whom to proceed with?

A.  Firstly, look at their management structure. Look into their relevant backgrounds and experience down the years. Look at the performance of the company and see how their track record measures up.
 

Secondly, make sure that their area of expertise matches your need. There’s no point in hiring a quantitative expert if you need a qualitative study. Look at who their clients are and if they do everything themselves or outsource.
 

Lastly, look at their LinkedIn and social media pages to see opinions and possible reviews of the companies. Also look for any publications they are associated with or have put out.

forward this email to a friend