Portion Economy Is Known As Black Economy †Myassignmenthelp.Com

Question: Discuss About The Portion Economy Is Known As Black Economy? Answer: Introducation The portion of the economy that grows at the cost of the government of a country, that portion of the economy is known as Black Economy. Whereas on the other hand White Economy can be referred to such part of the economy which has been accounted for and which is considered to act within the countrys rules and regulations. Thus, black economy is just the opposite division of a white economy (Williams, 2014). The economic activities in a black economy are carried out not abiding by the guidelines and protocols of commerce of that country and thus the activities of such economy are not accounted for taxation purpose. Such activities may be legal activities and may also be illegal activities. It is not always necessary that those activities which are not accounted for taxation purpose must be illegal. Whether the activities are legal or illegal are identified by the nature and characteristics of the goods and service of those transactions. As an example, if the payment of a worker who is engaged in construction works, takes place under the table even though the worker works legally then in such cases the payment made to the worker will be considered as a part of black economy. The payment to the worker was made in such a manner to avoid taxation. In the above case, both the persons i.e. the worker and the person who made the payment in lieu of construction work have violated the protocols of the country so as to avoid taxation (Schneider et al. 2015). Shared Economy A Shared Economy is such an economy where all the assets and services of the economy can be shared in exchange of either appropriate fees or may be without any compensation or free among the private individuals of that country. In other words, it can be said that in a shared economy an individual has the facility to derive or to lease assets or services that are owned by some other individual of that country (Schneider, 2015). Since the beginning of the society, the system of shared economy has been in use. Throughout these years the purpose have always been more or less the same only the process of sharing has been changes. The sole purpose or objective of shared economy has always been to enhance the lives of the people of the country. As the reason of introduction of internet in todays life, sharing has now become a lot more possible and easy and that too at a huge level. In a shared economy, the assets are used by groups or individuals in order to produce money and this resulted in emergence of abundant opportunities in a shared economy that were absent in a closed economy (Bitzenis et al., 2016). A business operator in Australia under traditional business model is Cab Charge whereas on the other and Uber is another business which operates under sharing economy in Australia and both business operator i.e. Uber and Cab Charge is operating under Transportation Industry in Australia. Enlightenment of the numerous aspects that are linked with traditional and with shared economy and how under these models of an economy, these characteristics effects the operations of the business of the organizations is the primary objective of this document (Ardizzi et al., 2014). In case of a shared economy, rights are given to the private individuals to utilise the assets that are not being used by the owners in exchange of some fees or may be for free which depends upon the nature of the asset that is to be used. But in case of Traditional Business Model, assets are only used by the owners for the sole purpose of their own business they are not let out for the use of other neither for free nor in exchange of any fees. Thus in order to understand the nature and characteristics of the two models of economy, Uber and Cab Charge and their business structures can be used. Uber is a business in Australia which allows a person to book a car or a cab for the purpose of travelling from one place to another. The main objective of Uber is to allow an individual to use the car for the purpose of that individual against some fees/ fare. The business is setup in such a manner that any individual can book an Uber cab by using its mobile app or by using the online system instantly as per the needs of the individual. This system also includes advance booking of rides for long as well as for short distances. In the above case it can be found that the car which is an assets of Uber Australia is being used by another individual for his/ her purpose and needs against some fare (Kirchgssner, 2017). As the business is about providing private cars to the private individuals of the country as per their needs thus sharing resources is the primary principle of Uber. As per the financial experts, a business leader like Uber have a turnover of more than US $20 Billion but shockingly, the company has disclosed only $18,000 in its Tax invoice which is in its first tax invoice in the country Australia which seems to be quite low compared to the huge business that it conducts. Uber Australia which is a ride sharing company has developed its business on the conception of sharing economy all around the globe. Not only this the aims and objectives of the company very much similar to that of the intents of a shared economy. The sharing of assets that are possessed by each other against some fees or free of cost subject to the nature of assets that is to be used is a sharing economy (Feige, 2016). Anyways, the concept of sharing economy or free sharing is not by various other organizations that follows some other economic model but however this does not have any impact over sharing economy. The construction of Uber Australia is primarily built on the concept of sharing economy. One of the prime objective of Australian Government is to achieve swift or agile economy. Thus there is a huge role of companies like Uber who are operating as a sharing economy in the achievement of this objective of the Government. It is not shocking to discover various other businesse s the Australia are functioning under the model of shared economy bearing in mind the fact that it is one of the earliest to be identified as a developed economy in the world (Alm and Finlay, 2013). As per a report of the company it discloses that in the year 2015 Uber has delivered more than 5 Million rides and in the future the number of rides are estimated to increase even further. However the management needs assess and to keep a strict watch over the companys debt structure (Winer et al., 2013). The company being an essential participant of the model of sharing economy but it has become parallel with the MNCs of the country. A report states that Uber Australia has a debt of $980000 which is much more that its first annual revenue which was $804000. The tax policy of Australia states that the companies that have gearing ratio of more than 60% are eligible to claim for deduction for loan repayment purposes. Another business organization operating in the transportation industry like Uber is Cab Charge. But Cab Charge does not believe in shared economy. Its business model is completely different from that of Shared Economy model. On one hand where Uber Australia is focused on Shared Economy model, simultaneously, Cab Charge on the other hand follows and operated under traditional business model. As stated earlier, Cab Charge works in a more traditional method where the concept of sharing economy is not followed (Schneider Kearney, 2013). Unlike shared economy model, in traditional model there are no rights to the private individuals to use the assets owned by some other individual free of cost. An individual needs to pay for each assets that are intended for their personal use or benefit under traditional model. Cab Charge operates under such traditional business model in the country under transport industry. Since December 1999 Cab Charge Australia Limited is an ASX 200 Company and listed in the Australian Stock Exchange. A system of payment was established by the company in the year 1976 which enabled the customers to pay into the companys account for using any of its services. The company entered into a joint venture with ComfortDelGro which took 49% interest of Cab Charge. In Australia, the company works by accepting services bookings and dispatching against some fares. Currently Cab Charge is one among the largest cab provider operating in the country with an enormous 7000 cabs (taxis) in service all across the country. The company still have a strong grip over its major shares in spite of the invasion in competition that took place post globalization. A huge credit goes to the management team and to the executive committee for making this possible (Putni? Sauka, 2015). However the companys payment system has come across several criticisms from the countrys regulatory authorities. I n reality there are various court proceedings for the suspected anti-competitive practices against the company. A Federal Court proceeding that was initiated in the year 2010 assuming the company was involved in anti-competitive acts which also includes predacious price policy by the company and for which the company had to pay a fine of S15 Million against settlement of the issue (Enste, 2015). The fine paid by the company was one of the highest fine for any company paid in the Australian economic history. An alternative system of payment was being introduced by Cab Charge in the year 1976 in order to avail the services of the company. The new system of payment brought about a vast revolution as it enabled the customers to avail an alternative cash payment system in the industry of transportation via Taxi. The primary and some major activities of the company that the new system includes are stated below: Cab Charge introduced non-cash mode of payment in taxi industry where the customers can pay in the account of the company instead of using cash as a mode of payment for using the cab services of Cab Charge. The company also introduced the Point of Sale devices at every cab with the help of which the customers were able to make payment using their debit or credit cards. Another essential area where the company made huge improvement was development of the existing software. An important area where development and improvement was necessary is the development of IT hardware in the cab such as Security Camera System, meters of the Cab and other transaction processing devices. In New South Wales and in Victoria the company Cab Charge also operates Bus and Coach services in addition to the can services which was established through joint venture business with its partner. As Cab Charge is operating under the traditional business model thus the primary goal of the company i.e. Cab Charge is to generate maximum profit from the operating activities of the company. Over the year Cab Charge has been quite impressive and successful in running taxi and other services in Australia. The revenue of the company has increased substantially particularly after the introduction of the new non-cash payment system during the year 1976. Nevertheless, as the turnover of the company has increased, the more there was an increased in controversies as well. Even several times the company had found itself on the negative side of the court proceedings as well (James et al., 2015). Australian Competition and Consumer Commission claiming that Cab Charge has breached various fair trade practices and violation of the rule of the competition in order to gain unjust benefits over its competitors, has initiated a proceeding against the company in the year June 2009. In the Federal C ourt of Australia, the Australian Competition and Consumer Commission started a proceeding claiming that the company has misused its powers in the market to set prices indiscriminately so that the company can gain benefits over its rivals. However after the company agreed to three contraventions of trade practices the case was finally settled. It is to be investigated which of the recommendations would be successful in order to reduce the involvement of the sharing economy to the problem of black economy it would be sensible to go through the recommendations that were made by the Treasury in Black Economy Taskforce Interim Report (Zellner Ngoie, 2015). Treasury of Australia made some recommendation so as to reduce the contribution of shared economy towards black economy. They are stated below: Only such firms are permitted to access to the procurement prospects of the Government of Australia who maintains decent tax records, The small firms and small business must be entitled to receive incentives who have made investments in the non-cash business model in order to motivate other business organization for following the same path, Expansion of the Taxation Payment Reporting system is extremely essential, By keeping provision for tax deductibility imposition of payments such as cash payment of wages, payment mad to the contractors should be restricted, Such technologies must be banned with immediate effect those are used to overpower/ suppress sales figures, By taking transformational steps integrity of business registration shall be enriched, On matters that are related to taxation, essential training must be given to the small business organizations and small firms so that they can understand the whole process of taxation and apply its advantages over their own business, Increase in the amount of funding must be made based on the activities of Australian Taxation Office, In order to ensure that the small business firms are not over burdened with excessive requirement of laws, regulatory encumbrances shall be reduced for the same, For the purpose of achieving better tax expansion in the entire economy, limitations on cash payment shall be imposed across the economy, In order to ensure a healthy and better system of taxation, a sharing economy-reporting regime shall be introduced, It is essential to reduce the GST threshold, Utilization of reprieves shall be lowered, Excessive arrangements that are not necessary shall be withdrawn, There shall be an increase in data privacy which must be utilised by the Government Agencies with utmost efficiency, In is very much important to introduce Phoenix taskforce, Beneficial ownership reforms. In order to attain the goal of Black Economy taskforce, it is very much essential to implement the above mentioned recommendations effectively. Thus the desired objective to reduce the contribution of shared economy towards black economy can be realised if the recommendations proposed by the Treasury is implemented properly (Pickhardt Sard, 2015). The recommendations that will aid the government in realising the desire goals are listed below: Regulatory requirements must be increased withdrawing the arrangements that are not necessary, Reduction/ limited use of reprieves, Introduction of Sharing Economy Reporting Regime, Non-cash payment incentives shall be increased, Cash based payment methods must be limited/ reduced across the economy, The regulatory burdens over the small firms and businesses shall be reduced, Training must be provided to every small firms and business employers and employees so that they abide by the requirements of tax Reference Alm, J. and Finlay, K., 2013. 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