Underground economy, also known as the Black market is when sellers and buyers trade their goods and services secretly to evade the price controls and tax rate set by the Prime Minister. The Black market is the second largest market in the world and these trades happens both in developed and developing countries. All kinds of goods and services are available in the Black market, but the goods that were most commonly traded are things that are available in the official market but at a lower cost in the Black market, or things that has a limited supply in the official market but sold at a elevated price in the Black market. Both ways work, despite the trade being illegal, as long as both the seller and buyer come to an agreement to the price.
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There have been many black market trade transactions going through in our society that we do not know of, but how are these black market trades affecting us? There has been shown various negative effects, but the most significant one is the effects it has on tax revenues- the unreported economy. The unreported economy includes economic activities that do not report their transactions to the government so that they do not have to pay for the tax, which at the end of the day causes tax evasions. Tax evasion affects everybody in Canada. These sellers do not pay for their taxes but still obtains the benefits that tax revenues are able to provide, including many public goods and services, making it unfair for the others who are in the official market. The government will eventually come to a smaller amount of tax revenues therefore having to drag down the quality or quantity of the provided public education and healthcare system, public libraries and many recreational facilities’ etc. In fact, they are also affecting the GDP (gross domestic product), which determines the Canadian dollar value. All of the black market sellers do not report their trades therefore lowering the annual spending of Canada, which causes the GDP of Canada to weaken and that tends to lower the value of the currency. With a lower currency value, it would be more expensive for us in Canada to purchase goods and
There have been many black market trade transactions going through in our society that we do not know of, but how are these black market trades affecting us? There has been shown various negative effects, but the most significant one is the effects it has on tax revenues- the unreported economy. The unreported economy includes economic activities that do not report their transactions to the government so that they do not have to pay for the tax, which at the end of the day causes tax evasions. Tax evasion affects everybody in Canada. These sellers do not pay for their taxes but still obtains the benefits that tax revenues are able to provide, including many public goods and services, making it unfair for the others who are in the official market. The government will eventually come to a smaller amount of tax revenues therefore having to drag down the quality or quantity of the provided public education and healthcare system, public libraries and many recreational facilities’ etc. In fact, they are also affecting the GDP (gross domestic product), which determines the Canadian dollar value. All of the black market sellers do not report their trades therefore lowering the annual spending of Canada, which causes the GDP of Canada to weaken and that tends to lower the value of the currency. With a lower currency value, it would be more expensive for us in Canada to purchase goods and