Monday, July 04, 2011

Ireland's Black Economy


I was talking about the squeeze in Ireland causing a return of the black economy which was a major feature of the Irish way of doing business in the 1980ies when there was 35% VAT. Bloody hell - 35% VAT can you imagine it now?

Well what 35% VAT did was to drive a large percentage of deals and services "under the counter" or over the border. Business' could not afford to be fully honest in many cases. The burden was crippling. Those were the days of "cash only" deals, of nicksers, and of barter.

I my opinion, it is getting back to that those 1980ies days. People's earnings have reduced, taxes have increased, many essentials are more expensive.

There is no VAT on "I'll build your shed if you do my garden". No trace on cash-in-hand deals. No VAT on many items purchased on the Internet. So where are people going to save the little money they have left??

No prizes for the answers.

The balance is wrong and I don't know what the solution is. But if the government and the TDs took an immediate voluntary 50% drop in their pay - it might give a moral lead to the country.

On second thoughts, IMHO the economic problems are largely moral and ethical problems. The imbalance between the fat cats on €200,000+ and those surviving on €10,000 is just too much to sustain in these times.


No comments: