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Speaker 1: It turns out black market, our black market is the

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Speaker 1: ninth smallest in the world. What does that actually mean?

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Speaker 1: This comes from the World Bank. It tells us the

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Speaker 1: hidden economy costs US around thirteen billions a year in

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Speaker 1: unseen taxes, which is about eleven or twelve percent of

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Speaker 1: our GDP independent tax ex But jeff Nightingale back with us, Jeffrey,

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Speaker 1: good morning, Good morning mate. It's a big number, but

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Speaker 1: not a bad number. What do we make of it

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Speaker 1: is about what you thought it might be. Does anyone

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Speaker 1: have a clue?

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Speaker 2: No, we don't really test it in New Zealand, so

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Speaker 2: that the World Bank modeling is about as best as

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Speaker 2: good as we can get. But I'd be surprised if

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Speaker 2: it was that big. I think it's significant, but you know,

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Speaker 2: we've got a pretty good tax system. Most taxes collected

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Speaker 2: at source when we pay wages and when we pay

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Speaker 2: interest and dividends, so there is definitely a cash for

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Speaker 2: a black economy. But I'd be surprised was quite as

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Speaker 2: big as as the World Bank is predicted.

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Speaker 1: And this takes in gangs as well as people going

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Speaker 1: just fix that for me and I'll give you fifty

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Speaker 1: bucks cash.

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Speaker 2: Yeah, there's three issues. There's the cases that we all

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Speaker 2: know there is organized crime and the process of crime,

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Speaker 2: which are run as sort of business enterprises and outside

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Speaker 2: the system. And then the third issue are sort of

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Speaker 2: under reported income, so income that doesn't get reported by

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Speaker 2: someone that's in the system, or expenses that are overclaimed,

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Speaker 2: and those three things add up to the tax gap

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Speaker 2: if you.

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Speaker 1: Like that last one. The IID seemed to be moving

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Speaker 1: on these numbers over the last couple of days about

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Speaker 1: people involved in investment, property and developers and stuff like that.

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Speaker 1: So something's happened with an IID and they're working a

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Speaker 1: little bit harder than they have. Is that fair?

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Speaker 2: That's absolutely true. So two things have happened. One is

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Speaker 2: POST a very kind of relaxed approach to get us

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Speaker 2: through COVID inland Revenue have tightened enforcement and so they're

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Speaker 2: doing projects in construction, hospitality, property. And the second thing

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Speaker 2: that's happened is they both have the technology now and

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Speaker 2: the funding to go after large data sets. So they

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Speaker 2: are matching up almost everything we do these days is

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Speaker 2: electronic and they are matching up those data sets tax returns,

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Speaker 2: and they're collecting, you know, reasonly significant amounts of revenue

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Speaker 2: from that?

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Speaker 1: Are we doing about as good as we can? There's

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Speaker 1: always going to be a black economy, isn't there?

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Speaker 2: There is? There is. I think we're doing about as

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Speaker 2: good as we can. I think, you know, there's always

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Speaker 2: room to do a bit more. And the point about

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Speaker 2: a collecting is not so much to get more tax

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Speaker 2: into and make government bigger. It's about keeping the tax

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Speaker 2: rates on those people in the system as low as possible. Yeah.

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Speaker 1: Interesting, all right, mate, appreciate your expertise as always Jeff Nightingale,

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Speaker 1: independent tax ex But for what it's worth, the top

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Speaker 1: twenty ish, as far as I can work out, are

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Speaker 1: all within a margin. The best in the world appears

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Speaker 1: to be at seven point nine percent of GDP Switzerland.

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Speaker 1: The States is second. Maybe that's a surprise to you

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Speaker 1: given their reliance on cash. China at eight do we

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Speaker 1: believe that? Japan at ten point two? We come in,

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Speaker 1: as I say, at ninth eleven point two. We're just

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Speaker 1: ahead of the UK at eleven point seven, Australia at

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Speaker 1: twelve point six. There is dodgy as but we knew that.

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Speaker 1: Ireland thirteen point two, and you go out to somewhere

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Speaker 1: like Saudi Arabia at fourteen point seven, but none of

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Speaker 1: them are you know seventy percent. For more from the

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