Report finds black economy equals quarter of Spanish output

Report finds black economy equals quarter of Spanish output

29th January 2014, Comments 3 comments

Untaxed transactions in Spain have surged to equal nearly a quarter of the country's output as unemployed workers scrape a living in the black economy, experts said on Wednesday.

The cash economy has flourished since 2008, when the collapse of a building boom hurled Spain into a double recession, a report by Treasury experts and academics said.

Cash transactions carried out behind the taxman's back in 2012 hit nearly 253 billion euros ($346 billion), or 24.6 percent of gross domestic product, according to the report released by GESTHA, a tax inspectors' union.

That year the conservative government announced it aimed to save 150 billion euros over three years through spending cuts and other austerity measures that sparked mass street protests.

Five years of stop-start recession have driven Spain's unemployment rate up to 26 percent, which has "contributed to a rise in the level of the black economy and fraud," they said.

Alongside this, Spain has seen "tax rises that were not accompanied by effective tax-collecting controls and an increase in cases of political and business corruption".

The real estate boom that went bust in 2008 "boosted the black economy and fraud, since many transactions were done in cash with 500 euro notes," said the report, co-authored by Rovira i Virgili University in Catalonia.

Since then, many companies have gone bust and laid off workers while tough spending cuts and tax rises aimed at fixing the public finances have squeezed Spaniards further.

Undeclared work is a fourth pillar of support for many families who are scraping by with handouts from relatives, charities and shrinking welfare benefits, the report said.

Meanwhile, anger at the crisis has been aggravated by numerous cases of corruption among political leaders.

"A belief among citizens that the government is making little effort to fight fraud is causing the black economy to grow," the report said.

"A doubt therefore arises as to how much governments want to interfere in the black economy, since millions of people depend on it and fighting it would create great social instability."


© 2014 AFP

3 Comments To This Article

  • Rich_Bcn posted:

    on 5th February 2014, 18:02:15 - Reply

    Its true, after a couple of years the Dole money tap gets turned off and there is literally nothing coming to you or your family, what do you do then? If it was me id do anything i could, legal or not to provide food and shelter for mine, and im sure thats exactly whats happening here.
    There are jobs in Spain, but the government have enabled companies to fire people and then reduce their salaries so if people want to work, they have to work for peanuts...its not looking good
  • Jack EnMadrid posted:

    on 4th February 2014, 23:31:11 - Reply

    Report finds black economy equals quarter of Spanish output

    Untaxed transactions in Spain have surged to equal nearly a quarter of the country's output as unemployed workers scrape a living in the black economy, experts said on Wednesday.
    The cash economy has flourished since 2008, when the collapse of a building boom hurled Spain into a double recession, a report by Treasury experts and academics said.
    Cash transactions carried out behind the taxman's back in 2012 hit nearly 253 billion euros ($346 billion), or 24.6 percent of gross domestic product, according to the report released by GESTHA, a tax inspectors' union.
    That year the conservative government announced it aimed to save 150 billion euros over three years through spending cuts and other austerity measures that sparked mass street protests.
    Five years of stop-start recession have driven Spain's unemployment rate up to 26 percent, which has "contributed to a rise in the level of the black economy and fraud," they said.
    Alongside this, Spain has seen "tax rises that were not accompanied by effective tax-collecting controls and an increase in cases of political and business corruption".
    The real estate boom that went bust in 2008 "boosted the black economy and fraud, since many transactions were done in cash with 500 euro notes," said the report, co-authored by Rovira i Virgili University in Catalonia.
    Since then, many companies have gone bust and laid off workers while tough spending cuts and tax rises aimed at fixing the public finances have squeezed Spaniards further.
    Undeclared work is a fourth pillar of support for many families who are scraping by with handouts from relatives, charities and shrinking welfare benefits, the report said.
    Meanwhile, anger at the crisis has been aggravated by numerous cases of corruption among political leaders.
    "A belief among citizens that the government is making little effort to fight fraud is causing the black economy to grow," the report said.
    "A doubt therefore arises as to how much governments want to interfere in the black economy, since millions of people depend on it and fighting it would create great social instability."
  • Jack EnMadrid posted:

    on 4th February 2014, 23:20:05 - Reply

    Spain is in very big trouble. The Spanish Government is UNABLE to Govern the Country, not able to create more jobs.
    On the contrary, Spain is is social danger and declining. Millions of people are living in POVERTY or worse..!
    There is no political will by the ruling PP majority government to make improvements. Incompetent government executives are PROVEN to be corrupt to the very core of its organization.
    Every day or every week big scandals are erupting from the sewer of the PP bastion.
    Spain has 6 million Jobless persons, 3400 suicides per year, people are jumping out of the window as the police comes to kick them out of the house.
    This is serious news, this is not a hoax, NO, this is Spain, now año 2014