The Business Council strongly believes all companies and individuals must meet their tax obligations and we strongly endorse the work of the Taskforce in this regard. At the same time, laws and regulations should not be so overly complex or burdensome as to stifle business activity or discourage people from willing participation and compliance.
The policy changes to curtail the black economy should look to level the playing field for businesses doing the right thing. It should not be about revenue raising for its own sake. Indeed, improved compliance, by broadening the tax base, offers the potential for lower tax rates overall.
Addressing the black economy is also important for improving trust in the tax system and institutions. As the interim report notes, key drivers of the black economy include high tax and regulatory burdens, social norms, the availability of cash, and the risk of detection and penalties. The broad consultation process by the Taskforce is a positive step towards ensuring all stakeholders have a voice in this important process.
The final report should build a rigorous and robust evidence base on which to craft future policy responses to the black economy. Proportionality should also be considered when developing appropriate responses.