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The effects of the black market on Irish Economy

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Adam Hoare

on 23 February 2015

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Transcript of The effects of the black market on Irish Economy

Why does it exist?
In simple terms, virtually all of the growth in our shadow economy is down to high costs of State regulations, price controls and taxes.
However there are consequences for even those who have no association with the black market. The sad truth is that in the long run it’s always the innocent consumer who picks up the tab for the shortfall caused by these shady practices.
What is the black market?
The effects of the black market on the Irish Economy
Today, the unofficial black market in Ireland runs at around EUR20 billion per annum.

The black market is the illegal business of buying or selling currency or goods banned by the government, e.g. drugs and firearms
How much is this shadow economy costing the government?
The estimated loss to the Irish exchequer is at least €800m a year
Heres how it works
A shortfall in tax revenue due to tax evasion puts more pressure on the government to increase taxes,
This then hits retailers hard, driving up the price disparity between legal and illegal products
As retailers struggle to protect profits and jobs in the sector, customers once again face rising prices across the board.
What does the black market deal in ?
Illegal Drugs
Fuel Smuggling
Last year, 100 people were convicted in Ireland for cigarette smuggling and related offenses
Illicit trade in fuel, tobacco, pirated software and digital economy services, pharmaceuticals and alcohol in Ireland accounted for some EUR1.5-1.6 billion in 2013
Ireland's black market is enormous and its impact is greatest in the high-revenue area of tobacco
Ireland is the second-most expensive country in the EU to buy a standard pack of 20 cigarettes, which now costs €9.60.
In 2009, the illegal tobacco trade peaked, with Revenue seizing 218.5 million cigarettes with a value of €92 million.
Average price of a smuggled packet of cigarettes is €3.20 and the vast majority come from factories in china
The border between the North and South of Ireland provides opportunities for
criminal gangs on both sides of the border to profit from cross border sales.

Diesel fuel laundering, which takes place mainly in the State, does pose a serious threat to the Exchequer
Differentials in the duty rates and exchange rates make smuggling fuel from one
side of the border to the other attractive at various times.
Department of the environment stated that it funds local authority waste enforcement staff to
the amount of €7.5m annually to combat the losses from illegal trade in fuel.
This all in turn leads to less money for the government to intervene in the economy, and so affecting all of the country.

In conclusion the blacket market has a large ripple effect to everyone including the average joe who has no dealings with the black market.
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