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You are here: Home News Spanish News Spain cracks down on tax evasion in 'black economy'
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05/03/2010Spain cracks down on tax evasion in 'black economy'

Spain Friday announced a plan to crack down on tax evasion, aimed in particular at its growing "black economy," in a bid to help slash the country's massive public deficit.

Finance Minister Elena Salgado said the government hopes it will raise additional income equivalent to about 0.1 percent of gross domestic product by 2013, or some one billion euros (1.36 billion dollars).

She said the plan will focus on "the black economy and undeclared work" and contains 60 measures to give a "new impetus" to the fight against tax evasion.

The government will target tax havens within the European Union, of which Spain holds the six-month rotating presidency, she said after a cabinet meeting.

"International cooperation will be strengthened through the signing of new agreements on double taxation, European programmes involving information exchange and the promotion of a European network to combat fraud."

Other measures include action to identify undeclared work and the creation of a database to share information between government departments.

"The fight against fraud is even more important at a time of economic crisis," she said.

A study by the budget ministry last week said Spain's "black economy" was worth almost 23.3 percent of GDP or 245 billion euros.

"The economic crisis led to an increase in tax evasion in Spain last year, sparking a 0.7 percent rise in the underground economy," the study said.

Deputy Prime Minister Maria Fernandez de la Vega said Friday the new tax plan would help "ensure the sustainability of public finances."

The government last month announced a plan to slash 50 billion euros (68 billion dollars) from the budget over three years in a bid to bring its public deficit down from an estimated 11.4 percent of GDP this year to within a 3.0-percent limit set for the 16 nations that use the euro.

The Spanish economy, the fifth largest in Europe, has been mired in recession since the end of 2008 as the global financial crisis hastened a correction that was already underway in its once-buoyant property sector.

Like other European nations, Spain has responded to the downturn with expensive economic stimulus programmes that have stretched its budget at a time when tax revenues are plunging.


© 2011 AFP


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