Auckland tradies are being targeted by the Inland Revenue Department in a bid to recoup unpaid income tax from the country's multimillion dollar 'hidden economy'.

Inland Revenue marketing and communications group manager Andrew Stott said sub-contractors were being targeted in north and south Auckland - specifically Flatbush, Takanini, Silverdale and Albany.

"It's specifically focussed on residential development in those four suburbs, but that could well become wider if it is an effective campaign."

Auckland was chosen as a location to pilot the campaign given its size of population and the construction work currently being carried out, he said.

"We've been working with the trade industry - Master Builders, Master Plumbers - and they're concerned, because they encourage their members to pay tax on all of their income [and they don't want to be] undercut by people who don't want to do that.

"We've done some research that says that 70 per cent of New Zealanders think that tradies should be declaring all of their income and paying tax on that.

"Tax in New Zealand pays for many of the things that we enjoy about this country and so it's important to encourage everyone to do that."

IRD had begun a two-month trial marketing campaign using adshel bus stops, ad-fences, radio, mobile phone ads, mobile billboards, trade magazines and digital advertising, Stott said.

"If this is successful then we'll look at other places in the country and other industries.

"We have a lot of activity outside of marketing that is about encouraging people to declare their income properly as well.

"Last year we looked at construction, but also hospitality and we looked at independent contractors - we know that for every dollar we spend in this area we get about $6 in return...it's a very cost-effective thing for us to do."

Unpaid income tax was a large problem for the country's economy, Stott said.

"It's called the hidden economy because people hide their income, we can't know for sure how big it is, but we know that last year our activities in this area brought in tens of millions of dollars in extra revenue."