With the above-ground economy struggling, it's not surprising that the underground economy is thriving. The underground economy, also known as the black market, grey market, or shadow market, is an attempt to evade government sales and income taxes on the sale of many goods.
A properly run black market leaves no paper trail for prying eyes, tax auditors or even spouses wanting to know if you have an income.
Pete keeps talking about abolishing taxes, but the people involved in the underground economy, the buyers and sellers, are actually doing anything to avoid taxes. Now, Pierre and the Conservatives probably know that these taxes are necessary for the government to fund little things like health, education, defense, protection of persons and property, roads, airports and even railways. The rest of the denizens of the underground economy are not so aware.
Even more disturbing is the fact that the black market is becoming more open about how it saves money by not having to print tedious invoices, pay credit card fees, or bother accountants with little things like bank deposits and inter-fund accounting. It's hard to resist these pocket-to-pocket payments when sellers have to charge 13% more to put new shingles on the roof or pave the driveway. Take this anecdote from my friend “Tom.” My brother asked me not to use his name, but he was simply telling me an interesting story.
Tom went to a local fingernail and toenail restoration shop with the intention of getting a pedicure, but his main purpose was to have his toenails painted yellow. While they were drying, he found a technician who told him that corncob yellow comes from Vietnam. Corncob is not a color found in Vietnam, but Tom found a yellow that he liked. The best thing you can do is not ask about Tom and his toenail painting.
Tom approached the man who worked the register and assigned customers to technicians. He asked if he wanted a debit card or cash. Tom, like many of us, doesn't carry much hard cash like coins. “I don't think I'm short on cash,” Tom said as he emptied his pockets. “We'll give you a big discount if you pay with cash,” the man who seemed to be the franchise owner said. Tom found a crumpled $20 and a $10 bill, handed them to the man, and said he wanted to give the woman who cut his toenails a $5 tip.
“Okay, I'll give it to her later,” Tom said, stuffing the bills into his pocket rather than into the register. The register gave no receipt, and so Tom and Yellow Nails left. Tom admitted he was very happy to save 20 cents per nail, but he was beginning to wonder if the people who painted his nails would get a tip. Still, Justin and Doug had no choice but to hang in there, he said. His brother lectured Tom about civic responsibility, but Tom replied that he was more worried about his own finances than the government's. Sure, Tom could save a few dollars by painting himself, but his limbs were getting so stiff that he could no longer reach his toes.
The underground economy has the side benefit of giving people who can't pay full retail price some relief for items they otherwise wouldn't be able to afford, but the loss in both sales and income taxes must run into the hundreds of millions of dollars for the government (the exact figures are unknown because no one is talking, taking notes, or keeping cashier receipts).
We all know that many of our government services need funding, but can you imagine a scenario where these services have to introduce their own funding – a version of the black market, grey market, or shadow market? You call 911 to request police that you have a loiter in your backyard, and the police department officer asks you, “Do you want to pay by debit card or cash?” Do you want to pay? Dispatch your car now! “Sorry, we need to add an extra charge to cover the officer’s salary before we can dispatch.” Do you need my debit card number? “Or you can pay the officer directly and get a discount on your service.” How much, how much? Those loiterers are invading my shed! “13% of your hourly rate, plus HST, you say?”
Or you'll be in line at the ER. The triage guy in green scrubs will tell you the fee is $$. Do you want to pay with a debit card or cash? If you pay with cash, you'll get in the discounted line, which currently has 4 people in it. If you pay with a plastic card, get in that line over there. You'll be number 33. “Donations” go 50% to the payroll pool and 50% to supplies. Today's fee is $15.50 for plastic card and $12 for cash.
Or when your child, no doubt a hockey protégé, needs special night skating classes but a cash-strapped school board has to bill for the coach's salary, do you pay with a debit card or with cash? Paying with cash guarantees your child will be on the A team and not the B team… and you start to wonder if you should have billed for the driveway resurfacing.
The underground economy may seem attractive when it comes to buying something as simple as a pedicure, but these little tax evasions add up. Now, if we could be confident that our political leaders would spend our money wisely, we might feel a little better about our daily taxes.
Oh, and what about Tom? He wore nail polish on his toenails to hide his nail fungus. The pharmacist charged a lot of money for the tincture and only accepted debit or credit cards, with no discounts for cash payments.
