Economics

The Underground Economy: Global Evidence of its Size and Impact

© The Fraser Institute, 1997

The Underground Economy: Global Evidence of its Size and Impact

edited by Owen Lippert and Michael Walker

The Fraser Institute Vancouver, British Columbia, Canada

© The Fraser Institute, 1997

Copyright © 1997 by The Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. The authors of this book have worked independently and opinions expressed by them, therefore, are their own, and do not necessarily reflect the opinions of the members or the trustees of The Fraser Institute. Printed and bound in Canada.

Canadian Cataloguing in Publication Data

Main entry under title: The underground economy Includes bibliographical references. ISBN 0-88975-169-2 1. Informal sector (Economics)—Canada. 2. Tax evasion—Canada. 3. Informal sector (Economics) 4. Tax evasion. I. Lippert, Owen. II. Walker, Michael, 1945,- III. Fraser Institute (Vancouver, B.C.) HD2346.C2U62 1997 330.9 C97-910090-9

© The Fraser Institute, 1997

Table of Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . xv Section 1: The Underground Economy in Canada Canada’s Underground Economy: Measurement and Implications . . . . . . . . . . . . . . . 3 Assessing the Size of the Underground Economy: The Statistics Canada Perspective . . . . . . . . . . . . . 11 Taxes, Deficits, and the Underground Economy . . . . . . . 37 Canadian Attitudes Towards Taxation . . . . . . . . . . . . 53 Revenue Canada: A Sectoral Approach to Measuring the Underground Economy . . . . . . . . . . 75 A Provincial Perspective on Revenue Forecasting . . . . . . 81 Section 2: Law Enforcement Perspectives on the Global Underground Economy The Illicit Underground Substance...