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It is estimated that the 'Black Economy' costs the Irish Economy over €1 billion per month - Leaving Cert Economics - Question 2 - 2008
Question 2
It is estimated that the 'Black Economy' costs the Irish Economy over €1 billion per month. (Irish Small and Medium Enterprises (ISME), August 2007). Explain the un... show full transcript
Worked Solution & Example Answer:It is estimated that the 'Black Economy' costs the Irish Economy over €1 billion per month - Leaving Cert Economics - Question 2 - 2008
Step 1
Explain the Black Economy
Answer
The 'Black Economy' refers to all economic activities that go unrecorded in National Income Accounts. This includes informal work or underground transactions that escape taxation and regulation. Such activities typically do not contribute to the official economic data and can have significant implications for government policy, taxation, and social services.
Step 2
Method:
Answer
One method the government could use to discourage the Black Economy is to enhance enforcement by revenue commissioners. This involves tightening the mechanisms for identifying and penalizing undeclared income or transactions, thereby encouraging compliance with tax regulations. Improved publicity regarding the risks and consequences of participation in the Black Economy can also deter individuals from engaging in such practices.