The revival of the black economy is costing the Irish government $7billion in lost taxes since the collapse of the Celtic Tiger.
Shocking new figures released by the Irish Small and Medium Enterprises Association claim illegal work practices will cost the exchequer that huge sum in 2011.
ISME also fears that the figure will only grow unless the government clampdown on businesses and tradesmen working for cash and social welfare cheats, thus defrauding the system.
The Association claims that workers are signing on for dole payments, while also claiming wages from cowboy employers.
It also claims that builders are undercutting competitors by offered VAT free deals for cash to customers as the construction industry comes to term with the near collapse of all trade in the current recession.
Mark Fielding, chief executive with ISME, told the Irish Examiner that “The level of black or unobserved economy activities depends on the incentives and opportunities to cheat."
“It is vital that the Government reduce the incentives to take business underground, by reviewing tax rates and public utility costs, by deregulating the labor market, addressing social welfare fraud and cutting red tape and a total revamp of the department of Social Protection.”
Fielding warned that legitimate businesses will go bust, jobs will be lost and the state will continue to lose huge amounts of tax revenue while the black economy thrives in Ireland.
His association has also estimated that the black economy will account for $35 billion worth of business in Ireland this year.
“There had been a shift towards a cash-only shadow economy, particularly in the construction and maintenance sectors,” added Fielding.
“Customers are now urging businesses to charge off the books to get cheaper prices by not having to pay VAT."
“Some people are secretly taking temporary work while signing on for illegitimate dole payments."
“It is also vital that there is an immediate clamp down on racketeering and rogue operators as evidenced by the level of seizures of contraband, and yet the massive amount of illegal goods that are available in the marketplace, which is costing the exchequer millions of euro per annum.”