The
UK black economy could be worth more than £100bn a year, according to new
research.
A
report in the Economic Journal, by academics at the University of Cyprus and
the University of Guelph, Canada, estimates that cash-in-hand work is the
equivalent of 10.6 per cent of gross domestic product.
Blue-collar
workers are the least honest, the report says, declaring 46 per cent of their
income, while white-collar workers are slightly better, reporting 61 per cent
of income.
The
Government is trying to clamp down on tax evasion, following a report on the
black economy by Lord Grabiner.
However,
the new report warns against raising taxes to make up the shortfall.
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"A
country trying to curtail the loss of tax revenue by raising tax rates can
create a vicious cycle, as this reinforces the incentive not to declare
economic activities to the public authorities," it says.
