Home' The Franchise Review : September 2017 Contents THE FRANCHISE REVIEW
Governments and large businesses should be doing more
to promote good supply-chain management. In the recent
Budget, the government asked the Taskforce, working with the
Department of Finance, to look at how to limit Commonwealth
procurement opportunities to firms with a good tax record.
We are also looking at private sector procurement, including
industry-led supply-chain certification initiatives.
Of course, the existence of the black economy is not just
caused by businesses, workers and customers. As we argued
in our Interim Report, high tax rates and red tape push people
into the black economy.
Not all of the settings that create incentives to enter the black
economy can be changed immediately, but we need to make
life easier for legitimate operators – especially small businesses.
We want to recommend practical ways to lower compliance
burdens for small businesses, including those that embrace
non-cash businesses models. We recognise that consumers
must play their role as well. They should know that participating
in the cash economy is not a ‘victimless crime’, but in addition
to this, we are looking at specific incentives and deterrents
One of the best ways of changing community attitudes is to
make clear that black economy participants will be caught and
punished. People need to know that there is a tough cop on the
beat. The community must have confidence that if they complain
to a regulator, the complaint will be thoroughly investigated.
Stakeholders have been telling us that governments – federal,
state and local – have work to do. They need to get better at
aligning rules and sharing information. People should only
have to tell things to the government once. This would make
it harder for dishonest people to do the wrong thing by telling
different parts of government different things. There needs to
be better sharing of data and intelligence across government
agencies – tax, welfare, immigration, customs and law
This will enable more robust enforcement, which may involve
naming and shaming offenders, publicising successful actions
and doing more multi-agency enforcement. These are all things
we are looking at closely.
The biggest challenge we have is that participating in the black
economy has become widespread. Many think it’s harmless for
tradies to do a few cash jobs, and for workers to be paid cash
off the books. Many think that buying illicit tobacco is okay.
But these practices cause problems. Because of the black
economy, honest people pay more than they should have
to; vulnerable people are exploited; and honest businesses
struggle to compete.
We need to change attitudes so people know that participating
in the black economy causes harm. This kind of change has
happened in the past – everyone now wears a seatbelt, and
drink-driving is frowned upon. We need to deliver the same
shift in attitudes about the black economy.
This will be a major focus of the Taskforce’s Final Report,
which will propose a range of public information, education
and other interventions to help bring this about. Ultimately,
the case for change must focus on the unfairness of black
economy participation, and the uneven playing field it creates
for business, consumers and employees who do the right thing.
Fighting the black economy is an obligation for us all.
The Taskforce has already made a strong start. On its
recommendation, the government announced in this year’s
Budget that it would extend the Taxable Payments Reporting
System (TPRS) that applies in the building and construction
industry to two more industries (cleaning and couriers) to
ensure that payments made to contractors in these sectors
are reported to the ATO. The TPRS has already improved tax
compliance in the building and construction industry.
The government also accepted the Taskforce’s
recommendation to ban the manufacture, distribution,
possession, sale or use of sales-suppression technology,
which some businesses use to understate their income.
Our final report to the government is due in October this year.
It will set out a practical strategy to crack down on the black
economy. Its recommendations will reflect the ideas and
feedback that we receive from industries like yours.
Further information can be found at www.treasury.gov.au/blackeconomy.
Black Economy Taskforce
Chair Michael Andrew
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