People working cash-in-hand are not the 'cheats' we should be worrying about

A Government minister has tried to deflect attention from wealthy tax avoiders by targeting people on low incomes who work cash-in-hand. We have evidence that undermines his claims.

Earlier this week (July 2012), Exchequer Secretary David Gauke told journalists “Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax. I think it is morally wrong.”

From 1999 to 2005, Gauke worked for a law company which specialised in helping wealthy clients avoid their tax. Activities of this kind are clearly morally wrong too - and cost the Revenue much more than people working cash-in-hand in the informal economy. Of the £25 billion of tax avoided in the UK each year, the vast majority is dodged by wealthy corporations and individuals.

Also, whilst Gauke's wealthy clients could easily have afforded to pay their taxes, we know that most people who work informally are doing it to supplement meagre benefits and feed their families. When our Community Pride Unit interviewed people who were working cash-in-hand, these are some of the stories we heard:

This (informal) work means I can contribute to the local community. Things can’t exist without it. The Centre would not exist without the volunteers.
Local resident involved in local community

I can earn more money than a regular job and it gives me a reasonable standard of living and an occupation.
Local pensioner supplementing state and small private pension.The latter prevents him from accessing additional benefits.

Bills and extras for children. Without this I wouldn’t be able to pay all of the bills.
Response of a grandmother when asked how she spent income earned through the informal economy

I would have preferred a ‘proper’ job and felt worthless on such a low wage.
Single mum who previously worked

It's time for politicians to stop targeting vulnerable people, and take real action to Close the Tax Gap.

Click here to download the full report from this work, Invisible Workers: The Informal Economy.

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