Simply... Off The Books


new internationalist
issue 173 - July 1987

[image, unknown] off the books

There are a million and one ways of working 'underground'.
NI looks at some of the innovations, tricks and fiddles
people get up to - and the consequences.

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1. Some people do socially useful things.

Like collecting and recycling garbage, making shoes out of old rubber tyres, selling water or providing informal transport in the overcrowded cities of the Third World. But this work is generally undertaken by the poorest people, earns them very little money and is not respected by society.

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2. Others do less useful things.

They can, for instance, sit with a pair of scales and offer to weigh passers-by, or buy cinema tickets for richer people who don't want to queue. Such services have to be sold extremely cheaply if those who offer them are to survive.

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3. Some are open about it.

Money changers throng street corners in many Third World cities, in spite of government attempts at currency control. Armies of hawkers jostle to sell their wares whenever and wherever they can, on buses, trains, or pavements between rows of traffic. In developed countries, 'cowboy' builders, plumbers and others insist on being paid in cash so that their earnings go unrecorded and untaxed.

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4. Others are more furtive.

Tax evaders 'cream' or 'skim-off' profits by keeping two sets of books, one showing the real income (for themselves) and one showing a lower figure (for the tax authorities). Multinational companies with operations in developing countries often declare low wages for their managerial staff while secretly topping up the income, untaxed, in Swiss bank accounts. Even more substantial corporate tax avoidance is achieved by using 'offshore' offices on Barbados or tax havens like the Cayman or Channel Islands.

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5. Some do it in small ways...

An increasingly popular trick for evading tax, especially in the US, is the bartering of services between professionals. A doctor will treat a lawyer free of charge in exchange for the latter's legal assistance. Other workers, like child-minders, window cleaners or home-workers merely 'forget' about earnings when it comes to filling in tax-returns or claiming state benefits.

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6. Others do it in big ways..

Sweatshop bosses often run a string of businesses, paying their workers a pittance and making them work long hours in overcrowded, unhealthy, often dangerous conditions. Operating on an even larger scale are illegal drug bosses who rarely get caught during their fabulously lucrative activities because they employ others to run the trafficking risks. And the really back-breaking work in the drugs business is done by poorly-paid peasant growers and pickers in the Third World.


[image, unknown] 7. Some do it just every way they can.

An accountant by day becomes a taxi driver in the evening and an interior decorator at weekends - but she or he only declares to the tax authorities the income from the accounting job. The typical moonlighter is a workaholic, already doing overtime in her or his regular job, but eager to make a bit more 'on the side'. In countries plagued by unemployment, this makes prospects for those without a job or work experience even bleaker.

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8. And some just cash in on others doing it.

Policemen and corrupt officials in Third World countries line their pockets with bribes from 'informal' workers. Regular payment must be kept up to avoid arrest or seizure of goods (also a profitable exercise for police). Mafias soon move in to illegal shanty towns to demand 'rent' from squatters who have taken part in land invasions. In some cities even street corners are rented out to traders by the local mafia.

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