Coronavirus: Tax-free black market workers struggle without access to a wage subsidy

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Ghosts and moonlight

The cost and hassle of business compliance is another reason people shirk their responsibilities.

Agnès * is a “ghost” who has never been inside the system.

She receives a jobseeker’s allowance but enjoys medical exemption for various reasons – she is practically unfit for work. But she’s artistic and started a craft business four years ago. It is not registered and does not pay any tax. The activity has stopped due to supply problems.

“I started to do it [register]”she said,” but a whole bunch of stuff was involved in setting it up and running, compliance stuff. So I put it on the back burner. “

She was so broke she couldn’t afford the costs – however small – and “it was way too complicated to sort out the smallest things with WINZ. The longer I can go without having anything to do with them, the better.” is. “

Give each other a hand

But when it comes to low-level things like cleaners and gardeners, Cuthbertson doubts there’s an appetite – or social license – to pursue them.

“I think most people would see that these people are actively trying to make ends meet and do something positive to support themselves,” he says. “I don’t think people would hit him. It’s very difficult – on the one hand everyone is paying for this tax loss, but the other point is that these people are helping themselves. and don’t reach out for a grant. “

During confinement, these are the people whose children no longer receive free meals at school; who are probably trying to keep the current going so their kids can participate in internet school; and who pay extra at the supermarket as cheap brands disappear from the shelves.

Record keeping and paperwork

Before Auckland closed shop, Henry * worked 15 to 20 hours a week with a gardening franchise, but did about the same amount of landscaping under the table.

“Some weeks it’s next to nothing and other weeks it’s all fine. It’s pretty sporadic,” he says.

His wife Tracey * does all of her work tax free – about 10 to 15 hours of cleaning.

It has all been wiped out and he is just short of being able to claim the full-time wage subsidy for his declared work.

The couple also receive the housing supplement, an invalidity allowance for their child and Working for Families; and thanks to their landlord offering a slight drop in rent during confinement, they are doing well, despite the loss of income of 30 to 40%.

It is being considered to become completely legitimate, but record keeping and paperwork has deterred it.

“Costs, expenses, it’s all a record-keeping trap,” he says. “And it’s more lucrative when you don’t have to pay taxes.”

“People were offering me the job at very good rates and beggars couldn’t choose. I wasn’t going to refuse it.”

This extra work for the folding, which he describes as mere “fluke,” but after two long spells of forced unemployment due to COVID-19 lockdowns, things could change.

“Having all that extra free time gave me a lot of time to think about the whole situation,” he says. “I’ve been thinking about my whole career, where I want to go. Thinking about becoming a full time employee so that in these events at least I can get a full time wage subsidy. same time last time. I don’t want to repeat it. “

But it isn’t the illegality of what he is doing that will make him change, and he doesn’t feel bad about not paying his share of the tax.

“I’m not the only one. There are a lot of people doing the same thing. It’s not like I don’t pay other tax… .. I pay tax. Why the hell should I declare for that [under the table work], you know, when i say i already work for [my company]? “

Here’s a reason – some of his “cash” jobs are actually paid for through bank transfers. Is he afraid of getting caught in an IRD data trawl?

“I hadn’t really thought about it.

“You still have plausible denial,” he said at last. “I can make something up.”

“All we’re trying to do is go ahead and make ends meet,” he says. “We are not trying to rip off the system… we are not dishonest people… we are good people.

“You can’t blame people for doing what they have to do to survive.

“I really don’t think the black economy is going to go anywhere anytime soon.”

* Names have been changed.

RNZ


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