Essay about Underground Economy
The underground economy or black market is a market where all commerce is conducted without regard to taxation, law or regulations of trade. The term is also often known as the underdog, shadow economy, black economy, parallel economy or phantom trades.
In modern societies the underground economy covers a vast array of activities. It is generally smallest in countries where economic freedom is greatest, and becomes progressively larger in those areas where corruption, regulation, or legal monopolies restrict legitimate economic activity.
The black or underground economy is the economic activity which is not measured by government statistics. This can include a range of different economic activities not measurable …show more content…
At the same time, a country trying to curtail the loss of tax revenue by raising tax rates can create a vicious cycle, as this reinforces the incentive not to declare economic activities to the public authorities.
The informal economy includes work which may be legal but which is kept secret from the tax and benefit agencies, or employment in illegal trades such as drugs and prostitution.
A cost analysis study for Transform concluded that drugs prohibition is "delivering precisely the opposite of the Government's stated claims" because supply and use is increasing, health problems are growing and there remain huge levels of crime.
The report said the combined effects of crime, health and costs relating to drug prohibition policies leave the taxpayer with an annual bill of £16.785 billion a year.
In contrast, it estimates that legalising and regulating all drugs would cost just £5.951 billion a year, therefore saving the public some £10.834 billion.
It said the Government has wasted £100 billion in the last decade tackling the illicit drugs market.
All societies consider some drugs to be legal and others illegal, and this remains the