The Black Market

The term black market refers to any situation where goods or services are exchanged illegally, due either to the goods or services being illegal in themselves or the transaction itself being illegal, or both. It covers a multitude, from the seemingly innocuous buying of knock offs at a market stall to international crime gang activity.

Worldwide the black market includes sinister transactions in human organs, endangered species, babies, weapons and human trafficking.

In Ireland when we hear of the black market we think of things like the sale of cigarettes and other goods imported illegally without payment of taxes etc, imitation designer goods, stolen goods, people working illegally or operating without licences and people providing services without declaring their earnings for tax purposes, to name but a few. The list is endless and our attitudes towards black market activity are very subjective depending on the situation.

While most of us would be appalled at the idea that in bagging a bargain we were really supporting an organized crime ring or even funding terrorism there is a huge grey area which may seem harmless. For instance many childminders operate under the radar and many people think nothing of buying fake designer goods or hiring a tradesman to do a small job for cash which may not be declared.

There is much flouting of copyright and royalty laws in the use of music and intellectual property.

Reasons for the existence of black market activity

Apart from the obvious reasons at the extreme end of criminality and sheer greed, there are many reasons why black market activity occurs.

• In some countries certain goods are banned giving rise to smuggling.
• Taxes may be seen as too high on goods so people seek ways around paying.
• People may not agree with certain taxes/charges and see nothing wrong with not paying.
• Some will simply try to get away with not paying and think it’s up to the powers that be to catch them.
• People crave designer goods and want to emulate celebrities but can’t afford the real thing.
• Householders needing repairs done try to get them done as cheaply as possible and maybe can’t afford registered tradesmen.
• Employment/licensing regulations may seem too cumbersome so workers especially those illegally in the country may try to circumvent them in order to make a living.
• Many people see ‘nixers’ as just a bit of extra cash on top of welfare.
• Workers may feel penalised by income tax and see no harm in trying to earn some tax free money.
• Some people may not realise or believe they are engaged in black market activity. They are simply doing the best they can as cheaply as they can and paying as little tax as they can get away with.

So what effect does the Black Market have on the Irish Economy?

It is estimated that black market activities cost the Irish economy €2.3bn each year.

This according to a recent report by consultants is comprised of €800m in lost revenue and retailers and intellectual property holders missing out on €1.5bn. Much of this illicit activity is blamed on government policies, difficulty in enforcement and public complacency towards what is often seen as victimless crime.

Sometimes policies introduced for laudable reasons can have unwanted consequences. The minimum unit pricing for alcohol introduced last December was intended to reduce consumption of alcohol as a health measure is fuelling black market activity as consumers look for cheaper products. Alcohol now costs more on average in Ireland than any other EU country bar Finland due to high excise rates, but alcohol smuggling is costing the economy €655m a year.

Similarly, the ever increasing excise rates on cigarettes may have resulted in some reduction in smoking levels but has also facilitated a rise in illicit trade taking €450m out of the economy. It is estimated that 1 in 4 cigarettes smoked in Ireland has been smuggled into the country.

Excise charges on diesel has resulted in widespread fuel laundering operations to avail of the cheaper agricultural diesel costing the economy €435m a year.

Legislation hasn’t caught up with the downloading of media content and so the rise in illegal activity in this area is continuing unabated, costing retailers and the exchequer €390m.

Fighting the Black Market

The battle against illicit activity is ongoing but never seems to be enough to stem the flow. The current levels of convictions are not a deterrent to even casual criminals.

A total of €35m worth of tobacco products and €600,000 of alcohol was seized last year, an increase of 100% since 2010, but are only drops in the ocean compared to the level of black market trade going on.

There have been a number of campaigns run to remind the public that there is no such thing as a victimless crime and these need to be continued in all sectors, informing people on the effects of black market trade on people like themselves.

There is a need to encourage people to stop and think about the origin of goods when offered what appears to be a bargain. If people only thought that what they were thinking of buying was the result of someone else having their home broken into and terrorised they might think twice.

Money lost to the exchequer reduces the pot to be shared among vital services and reduced profits for companies may result in reduced wages or employment for others. people who don’t care about ripping off the state or big business may begin to care if they realise the end consequences of their actions.

Black market activity has such a firm foothold in our economy that we need to put in more resources to fight it. We need a zero tolerance approach to all criminal activity that steals from retailers, legitimate trades people and the taxpayer. We need enforceable legislation and more imaginative sanctions.

It is ingrained in the Irish psyche that informing is a bad thing but perhaps it is time to consider rewarding informers and whistle blowers when information results in a conviction.