How Black Money Works (+27) 67-807-2275 - Johannesburg

How Black Money Works

In its simplest form, black money is money on which tax is not paid to the government. A store that accepts cash for its merchandise and does not issue receipts to its customers will be transacting in black money, as it would not pay tax on the unaccounted sales. Furthermore, a property buyer who purchases land valued at $200,000 from which $50,000 is reported on the books and $150,000 is paid under the table to the seller, will have transacted in black money worth $150,000. The sellers in both examples have earned money from legal sources but evaded taxes

The portion of a country’s income that is tied to its black economy affects the economic growth of the country. The black economy constitutes a financial leakage, as tax income from unreported earnings is not received by the government, thereby constituting a loss of revenue. In addition, as these funds rarely enter the banking system, economies are stifled because money remains hidden that otherwise could be used by banks to stimulate the economy by funding small business owners and entrepreneurs.

Furthermore, black money causes the financial health of a nation to be underestimated. As it is almost impossible to estimate the amount of black money in any economy, unreported earnings cannot be included in a country’s gross national product (GNP) or gross domestic product (GDP). Thus, a nation’s estimates of savings, consumption, and other macroeconomic variables would be misleading, with the inaccuracies adversely affecting planning and policy making. What's App, Call:- Black Money (+27) 67-807-2275 or Email:- blackmoney20200@gmail.com