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Paying Cash in Hand: How it can hurt the economy

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At some point, many of us have done it – paying cash in hand for it to go straight into the sellers back pocket rather than to the tax man, while we get a little discount. Everyone’s a winner, right? Well as we might benefit from that little saving we just made, it may be hitting our pockets elsewhere as the government is forced to re-coup losses from cash in hand payments, in other areas and according to the Treasury Minister David Gauke, it is simply morally wrong.

How much is it costing the UK?

According to the Treasury, these ‘off the books’ deals are costing the country around £2bn a year and forcing taxes up for other Britons. In these times of financial austerity and with high profile cases such a Starbucks, Amazon and Jimmy Carr in the spotlight for tax evasion, the debate continues and raises two initial questions. Is tax evasion, regardless of scale, always equally wrong? Secondly, is the consumer getting a discount for cash and not questioning why, as much in the wrong as the trader cheating the tax man?

paying cash in handIt is always wrong?

The first question would depend on whether you apply the utilitarian rule that any law or code must be universally applied if it is to have any moral value. In this case, no matter how small the ‘bending of the rules’ is, it is just as morally wrong as someone who is milking the system to save millions in tax. However, according to philosophy author Julian Baggini, while breaking the law by knowingly evading tax is immoral, it is not always equally so.  There are certain ‘degrees of wrongness’  and compared to the global scale of tax avoidance, then cash in hand tax avoidance, when put into perspective, is minor. When you look at the big picture of families struggling to make ends meet while the very wealthy hid at least £13tn in tax havens in 2010, can you really put the two in the same category?

Ignorance is bliss?

In order to answer the second question of morality, is asking to pay in cash just as wrong as accepting cash to avoid tax, you must ask yourself what you are asking for, by paying in cash? People should be free to pay for goods or services in whatever method they wish, cash, cheque, bank transfer or PayPal? The moral dilemma comes into play if you are asking to pay in cash with full knowledge that the money will not be declared in tax or if you are asking for discount in return. However, if we are paying for goods or services by cash for a genuine reason such as you don’t have a bank card or cheque book, then surely you have no blame in the matter, after all, it isn’t up to you to ensure your tradesman’s bookkeeping is accurate and honest. According to Baggini, simply not questioning whether the money will be declared, labels you as being culpably ignorant by choosing not to know.

paying cash in hand

Are we all paying the price?

We have all tutted and complained about the amount of people fraudulently claiming benefits, costing the economy millions while taking away from those that really need it, but aren’t we just as guilty of the same by paying cash in hand? Or is it that it is more acceptable because we ‘all’ appear to benefit from this and winning a small battle against the tax man? Unfortunately the small savings we may all make soon add up to one huge deficit in the economy and as we have repeatedly been told by the current administration ‘costs must be cut and money needs to be recouped’, the reality is that we aren’t making a saving at all. The costs are being recovered by additional taxes for everyone, regardless of whether they’ve paid cash in hand or not; sadly we are all paying the price and even though the moral debate will continue for years to come, the days of paying in cash for discount may soon come to an end.



About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

Website: Rebecca Robinson

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