The cash conundrum

Jul 25 2012 07:51
Fadia Salie

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BRITAIN'S Treasury Minister David Gauke this week told BBC Two's Newsnight that it is "morally wrong" to pay tradesmen such as plumbers, builders and cleaners in cash in the hope of avoiding tax, arguing that the practice comes at "a big cost" to the Treasury and means other people have to pay more.

This got me wondering... how many of us pay our tradespeople and domestics in cash? Does it ever cross your mind that they or even you are dodging tax? After all, we are paying in cash (with after-tax money) because most of the people we deal with prefer cash.

"I don't trust the banks... they take too much of my money I work hard for," Noluntu, passionately known as Auntie Sylvie, told me when I employed her.

A colleague tells me her mechanic says he needs a cash supply because the people who provide him with spare parts demand to be paid in cash.

So basically, he and the spare parts people are running cash businesses. These small firms run the risk of being easy targets for robbers, but I assume it is a chance they are willing to take.

Gauke said his government estimates it loses about £2bn each year to the black economy, as tradesmen fail to pay VAT or income tax by not declaring payments and keeping them "off the books".

Our South African Revenue Service (Sars) has been doing a splendid job in swelling the state coffers in the last few years. Just yesterday Sars reported a new record of over 1 million taxpayers filing their returns in just 22 days after launching the new tax filing season.

And how do we know Sars is not already policing small business owners taking cash for services rendered?

Back to the initial question: is it morally wrong to pay in cash? Gauke says no, but doing it knowingly to avoid tax, yes. What is your take?

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sars  |  tax evasion  |  tax



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