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."
© 2014 AFP