Editor’s Note: Cross-posted from the Counterfeit Cigarette Enforcement Forum.
From: EY | Tax Insights
Australia’s Black Economy Taskforce issues consultation paper to address cash economy
On 2 August 2017, the Australian Government’s Black Economy Taskforce (BET) released a further consultation paper entitled Black Economy Taskforce: Additional Policy Ideas. The paper outlines 54 additional policy ideas based on recent industry roundtables held across Australia during the month of June, following the release of an interim report in March 2017.
The Taskforce is focused not only on ”cash economy” activity but more broadly on the activities of individuals and businesses who operate outside the tax and/or regulatory system. The size of the Australian black economy has conservatively been estimated at around AU$25 billion annually, though this is highly likely to underestimate its scale.
The 54 ideas are grouped under four key themes which may give clues as to possible outcomes of the review which is due to conclude with a report to Government in October 2017. The first three reflect the framework of an increasingly digitally enabled tax and regulatory administration driven by access to deep sources of real time audit data:
1. Hard wiring Government. There is broad recognition that despite advances in technology and the existence of substantial potential sources of data, the various levels of government and regulatory enforcement agencies do not, or cannot exchange information in a way that is effective to combat the black economy.
2. Modernizing the payments system. The issues covered range from the use of technology to discourage the use of cash to incentivizing the use of non-cash payments.
3. Incentives and deterrents. These cover a broad range including limiting government procurement only to suppliers that are able to demonstrate good tax and regulatory compliance as well as supply chain transparency. In a small and geographically discrete market such as Australia where the Government is a major customer in many sectors, this could be a powerful incentive to change behavior.
4. Changing social attitudes and education. The BET observed that attitudes are changing to black economy behavior as it is less being regarded as a ”victimless crime” as it increases the tax burden on others and contributes to inappropriate outcomes under the welfare system.
Key policy suggestions raised in the additional report include:
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