With the above-ground economy struggling, it is not surprising to note that the underground-economy is flourishing. The underground economy, also known as the black market, the grey market, or the shadow market, is the attempt to avoid taxes on the sale of many goods that attract government sales and income taxes.
A properly run black market leaves no paper trail for snoops, tax auditors, or even spouses who are curious about the income or lack thereof.
While Pete keeps talking about axing the tax, the people, buyers, and sellers, involved in the underground economy are actually doing something to avoid the taxes. Now, Pierre and the Conservatives probably know that the government needs those taxes to fund little things like health, education, defense, protection of persons and property, roadways, airports, and even railways. The rest of us undergrounders, are not so aware.
What is becoming more disturbing is that the black markets are becoming more open about how they are saving you money because they don’t have to print those pesky invoices, pay credit card fees, or bother their accountants with trivial things like bank deposits and inter-fund accounting. These pocket-to-pocket payments are hard to resist when the seller has to ask for 13% more for putting new shingles on your roof or paving your driveway. Take the anecdote about my friend ‘Tom’. My brother said not to use his name, he was simply relating an interesting story to me.
Tom went to one of our local fingernail and toenail repair places, wanting to get a pedicure but primarily to get his toenails painted yellow. Corncob yellow, he told the technician who he discovered during the drying process, was from Vietnam. They did not have a colour named corncob, but Tom found a yellow that he liked. It is best you do not ask about ‘Tom’ and his toenail painting.
Tom approached the fellow who was running the cash register and assigning the customers to their technicians. Will that be debit or cash, he was asked. Tom, like many of us, does not carry much cash in the form of coins of the realm. I don’t think I have enough cash, Tom said, emptying his pockets. "I give good discount for cash," said the fellow who may have been the franchisee. Tom found a crumpled 20 and a 10 and passed them to the man, saying he would like to give a five-dollar tip to the girl who did his toenails.
"Okay, I'll give it to her later," as he stuffed the bills into his pocket, not the cash register. There was no cash register receipt forthcoming, so Tom and his yellow toenails departed. Tom admitted that he felt pretty happy about saving 20 cents per nail, although he was beginning to have doubts about whether his toenail painter would ever see her tip. Still, Justin and Doug would just have to suck it up, he said. My brother gave Tom the lecture about civic responsibilities, but Tom replied that he was more concerned about his own finances than that of the government. Yes, Tom could have painted them himself and saved a few dollars, but he is getting stiff of limb and can no longer reach his toes.
The underground economy does have one side benefit in that it provides some small relief to people who cannot afford to pay full retail for items that they would otherwise have to do without. However, the loss in taxes, both sales and income, must be in the hundreds of millions of dollars to our governments. (The exact figure is unknown because no one is talking, keeping notes, or the cash register receipts).
We all know that so many of our government services are in need of funds, but can you imagine the scenario when these services have to adopt their own funding – a version of the black, grey, or shadow markets? You dial 911 in a request to the police about a prowler in your backyard: the police department employee asks, “Will you be paying with debit or cash?” Paying? Just send a car, now! “Sorry, we have to add a surcharge to supplement the officer’s salary before we can dispatch.” Do you want my debit card number? “Or you can get a service discount if you pay the officer directly.” How much, how much? That prowler is breaking into my storage shed! “13% of the hourly rate. HST, you know?”
Or you line up at the ER. The triage person in the green scrubs says the processing fee is $$: are you paying by debit or cash? If you pay cash, we will put you in the discount line which is now at four people. By plastic, you go into that line over there – you will be number 33. The ‘donation’ goes 50% into the salary pool, 50% into supplies. The rate today is $15.50 plastic or $12 for cash.
Or your child who is no doubt a hockey protégé, needs to attend special evening skating classes, but the school board, short of funds, must charge for the coach’s salary: will you be paying by debit or cash? Cash will guarantee your child gets on the A team, not the B team. . . You begin to wonder if you should have asked for an invoice for that driveway resurfacing.
The underground economy may look attractive when you are getting something as simple as a pedicure, but these little tax avoidances add up. Now, if we just had confidence that our political leaders would use our money wisely, maybe we would feel a little better about our daily taxes.
Oh, and Tom? He gets his toenails painted to hide the nail fungus. His pharmacist wants a fortune for the tincture, and they just take debit or credit – no discount for cash.
