ken against the underground economy. Taking such action is expensive and, as the case of illegal drugs illustrates, often ineffective. There is considerable financial incentive for individuals to participate in the underground economy and additional enforcement is not likely to deter them, according to Starobin.
Instead, in an innovative approach which should be carefully considered, he recommends a value added tax. Such a tax would cost participants in the underground economy more than they pay now, but would not add a burden which would make it impossible (in most cases) for them to continue. In this way, the government would be able to reap the benefits of the underground economy without having to identify its participants.
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