There is an article today in the Danish newspaper Politiken describing (in Danish) how moonlighting has been minimised in Sweden:
[In Sweden], the state pays half the bill for child care, cleaning and other housework. 890,000 Swedes used the system last year, and 67,000 firms have signed up as providers.
Legal expert at Skatteverket (Sweden’s HMRC), Pia Blank Thörnroos says:
“Our view is that a very large part of the unofficial economy has been legalised. In recent years we have had a so-called invoice model which means that citizens pay half of the price to the service provider and the company gets the second half from the tax authorities. It has created a huge incentive for getting rid of moonlighting, why buy services without a receipt when you can buy them legally for half the price?”
The Swedish government last year paid SEK 8.1bn to firms. But the money comes back to the exchequer in the form of VAT and increased tax revenue according to Pia Blank Thörnroos.
I think this is a brilliant idea!
Of course it can be discussed whether the state should pay 40 or 50 percent of the bill, and there will be some issues with deciding exactly which jobs that apply for the subsidy, but the principle is sound.
Even if it doesn’t actually increase revenues, surely it’s a good thing to know the size of the economy, and to ensure that unemployed people are genuinely unemployed.
Also, if the work is done by registered companies rather than moonlighting workers, it’s much easier to ensure everything is done according to regulations and that proper insurance is in place.