New Zealand’s acceptance of unreported labor work and “cash jobs” is costing the country dearly, with the underground economy now being valued at more than 12 percent of the country’s Gross Domestic Product.

According to recent research conducted by the international tax activist group Tax Justice Network, New Zealand has an underground economy worth approximately NZD 20 billion per year. The extent of this shadow economy ranks New Zealand as the 51st most affected country in the world by the cost of unreported transactions. It is estimated that the New Zealand government misses out on approximately NZD 7.1 billion in tax revenues from activities in the shadow economy. The total of the lost taxes is approximately equivalent to 44 percent of the country’s health care spending.

Currently, a significant portion of the underground economic activity is attributed to criminal activity, unreported online trading, and work conducted by tradesman for cash.

The Revenue Minister Peter Dunne commented on the findings, saying that the NZD 20 billion estimate is approximately the same as he expected. He went on to say that New Zealand’s underground economy is mostly comprised of “…mate’s rates, cash jobs, jobs in kind, all of those sort of things which are very hard to track down.” The Minister conceded that high-level corporate tax evasion also exists, but the informal economy and cash deals were an ingrained aspect of New Zealand life.



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