One of the big selling points of the GST was its claimed ability to “crack down on the black economy”, forcing people escaping the then tax system to pay their rightful share of tax.

Treasure Peter Costello and the Prime Minister made sure we all understood that virtuous aspect as the treasurer said on 2GB in February 2000, just over four months before the tax started on 1 July that year:

Well, one of the good things about GST of course is it gives you the ability to pick up the black economy. And the way in which you do that is if you don’t have a GST number there’s a withholding provision … This tax cracks down on the black economy and that’s the whole idea of it …

And then in a large number of articles in the intervening years we were told of a possible amount the crackdown on the ‘black economy’ might capture:

In its long-awaited report on a Tax Office cash economy clampdown, the Audit Office said up to $20.7 billion in public revenue was lost each year because many businesses hid their full income by receiving and paying their employees with cash.

And the Tax Commissioner was planning yet another “crackdown” in 2003. Of course there was doubt about whether the “crack down” was really killing off the black economy or curtailing it, such as this report in the Age from 2003.

But the GST has gone on, mopping up billions and powering the greatest spending spree by governments, state and federal, all fully funded, courtesy of the tax payers. But what about the black economy?

Well it now seems it might be getting a little too hard for the Australian Tax Office.

Yet another crack down was threatened by the Tax Commissioner. The rather worrying word, “endemic” was used by the tax boss to describe the problems of the black economy which would take “years to fix.” Life seemed so simple back in early 2000 when selling the simple virtues of a GST.

This is what the commissioner told a parliamentary inquiry on Friday, according to the Sydney Morning Herald.

The Tax Commissioner has conceded the black economy is “endemic” in Australia and he needs to put “a lid” on it, but he has refused to inquire into the extent of the problem. 

Oh, dear and the line on capturing the black economy sat so well with the Treasurer and his Prime Minister back in 1999-2000.

Peter Fray

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