What is Black Economy

The black economy—also called the hidden, covert, underground, grey, illicit, or cash economy—is used to describe the aspect of a country's economy that is not visibly subject to taxation. However, it is also a useful measure of behavioral disruption to the taxation system, as the scale and tactics of black economy participants vary over time. The purpose of this chapter is to suggest that existing tax policy (where legal constraints alone are used) is insufficient to affect black economy behaviour. It suggests that by adopting responses that are “more than law,” revenue administrations can deploy a more advanced and effective approach to improve tax compliance and can decrease the negative impacts of the black economy.