My first thought were how encouraging it was that the Coalition has managed to get every prostitute and drug dealer to fill out a Tax Return, pay their taxes and change their professions on the return from pre 2010’s ‘horizontal folk dancer’ and pharmacist’ .
Alas the reason for trying to categorise and estimate the SIZE of such areas of the ‘shadow economy’, so named as they know various financial transactions happen that are not recorded, but still affect other consumer statistics e.g. retail spending, is in the following paragraph.
“The more inclusive approach brings the ONS into line with European Union rules and will eventually allow comparisons of the size of the shadow economy in different member states.”
In some countries the ‘shadow economy’ was/is huge e.g. Italy where forget waiters tips, it was common practice to have an agreement between seller and buyer of a home to lower the recorded price for tax reasons (cash made up the difference).
But wouldn’t it be better to pay a small army of EU bureaucrats try to catch those not paying taxes, rather than try and ‘estimate’ shadow numbers out of the air i.e. 60,879 Prostitutes (no rounding up there then) and spliffs puffed upon?
Size is important, especially in politics.
How honest will countries, without independent stat collectors like our ONS, be in SHOWING the depth of their shadow economy, especially now when most of Europe have flat growth?
How pathetic will opposition parties be within those countries if, say, Prostitution and Drugs estimates makes the difference between being 0.3% in a recession versus 0.4% of growth?
How pathetic will opposition parties be when trying to disguise their lack of policies with soundbites, use lower levels of Prostitution and Drugs under their administration, to hit a government showing much higher growth in those areas due to a recovery?
Time will only tell, but how very EU it is as an economic exercise..