Activities that take place in the black economy reduce the amount of tax revenue governments are able to collect.1 The black economy undermines the integrity of our tax system, penalises taxpayers who do the right thing and, if unchecked, can foster a damaging culture of non-compliance in the community.
Policy and enforcement initiatives in this area need continuous attention. The activities are difficult to detect and the amounts involved are often relatively small. Technological and other economic changes, including the emergence of the sharing economy, pose new and unfamiliar risks. Given this changing policy landscape, it is necessary to take stock of existing strategies, consider emerging international best practice and develop new tools and approaches.
Accordingly, the Black Economy Taskforce will:
- Examine evidence on the scope, revenue implications, risks and behavioural factors underpinning black economy activities.
- Consider the effectiveness, efficiency and appropriateness of existing policy responses.
- Review the anti-black economy efforts of other countries, identifying best practice initiatives which could be applicable to Australia.
- Develop a framework to guide future policy development on the black economy, including identification of opportunities, risks and trade-offs.
- In light of this framework and applicable budgetary constraints, outline an overarching policy strategy (noting that a number of specific ideas are already under development). This strategy will include recommendations on:
- how best to identify, track, manage and respond to risks;
- innovative policy responses which take advantage of emerging technologies and thinking on shaping behaviours;
- strengthening whole-of-government cooperation (including better use of existing, underutilised data sources), including state administrations;
- the scope to work more closely with the private sector, including tax agents and accountants;
- resource requirements and evaluation mechanisms.
The Black Economy Taskforce will report to the Government by the end of October 2017. An interim report was provided to Government in March 2017.
1 The black economy refers to people who operate entirely outside the tax system or who are known but do not declare an income source. Those who use cash or cryptocurrencies to avoid their tax obligations are part of the black economy.