Someone was bound to do it, and the first to get there was myvouchercodes.co.uk. Following Treasury minister David Gauke’s comments about the morality of paying tradesmen in cash, there just had to be a survey on the issue. And the results are hardly surprising, to anyone except perhaps Mr Gauke.
1. 55% of respondents had paid cash-in-hand (it’s good to be in the majority for once in my life, even if it does also include Boris Johnson).
2. 40% of those who had been paid in cash had specifically requested this payment method.
3. 70% of those who had been paid in cash had not paid tax on the income (ah well, back in the minority again).
Those surveyed included builders (no, I paid them by cheque), hairdressers (sometimes in cash, but I see it go through the till), personal trainers (yes I sometimes paid him in cash) and restaurant workers (I always try to tip in cash to make sure the waiter/waitress actually sees the money).
Apparently more than 2 million people make cash-in-hand payments, at an estimated cost to the Treasury of £2 billion. Of course it is not making the payments in this form that incurs that cost, but the recipients not declaring them for tax purposes, and I think we need to remember that.
So what is interesting about all this? Well how about…
1. Non-tax related reasons for paying in cash. I don’t want restaurant owners pocketing the tips intended for their waiters, so I tip the waiter in cash – he doesn’t ask me to and I remain in blissful ignorance of his tronc or other tax arrangements.
The only time I have ever been asked for payment in cash (too many people know what I do!) it was on the basis that the recipient had exceeded his bank overdraft limit, and if he paid a cheque into the bank he would potentially never see the money again.
Also, I was not aware that it was now legally required for a business or an individual to have a bank account. Many of us have as little to do with banks as possible, and would like if possible to have even fewer dealings with organisations that appear to have spent the past decade+ mis-selling us financial products, fixing interest rates, overcharging us for banking services, failing to lend money to business at a time when the economy badly needs it, avoiding tax on a scale that dwarfs the puny efforts at evasion of the cash in hand tradesman, and incidentally causing the worst worldwide recession for over 80 years. On that basis I feel rather more immoral having a bank account than I would not having one. How can it be morally wrong for someone without a bank account to make or request payment in cash? What else are they supposed to do?
2. The large number of customers who like to pay in cash; if only 40% of tradesmen are asking for cash but 70% have been paid in that form then this is ther only logical conclusion. Presumably Mr Gauke would suggest that that means that all those customers must be tax evaders too, and that they are effectively laundering their ill-gotten gains by paying for services in cash. However, outside the fantasy world of Treasury ministers, I like to have some cash about my person (call me old-fashioned, but how close did our banks come to meltdown in 2007?) and sometimes it is more convenient to pay in cash than by cheque or credit card.
3. The apparent extent of opportunistic, as opposed to systemic, tax evasion. If only 40% of relevant tradesmen have asked for cash payment but 70% have evaded tax on cash receipts, a lot of them are not pre-planning their evasion but succumbing to the specific temptation of being paid in cash.
4. Is the inherent demise of the cheque not going to make this problem a whole lot worse? In the rush to assume that the whole population is on-line and computer literate, is the banking industry not going to make a further contribution to the tax gap by increasing the temptation to opportunistically evade tax? I don’t think our gardener, cleaner or window cleaner is likely to come to our door armed with a credit card terminal any time soon.
None of this is to excuse tax evasion, which is inexcusable in any circumstances, but instead to suggest that ministers might consider all the implications of what they say before they enter soundbite mode.