By Euro Weekly News Media • 11 February 2014 • 16:53
EASY MONEY - black economy on the up
THERE has been a resurgence in the black economy over the last few years according to the Ministry of Finance (Gestha).
In its latest report Gestha calculated the black economy to be worth €253 billion, that is nearly a quarter (24.6 per cent) of Gross Domestic Product (GDP). In 2008, at the start of the crisis, the figure was an estimated €60 billion less.
The report, called ‘The underground Economy Takes its Toll. The Increase in Fraud during the crisis’ highlights that it is smaller business that more likely to operate in the black economy. It said: “The underground economy has increased particularly in the regions most affected by the problem of unemployment and the bursting of the property bubble, such as Andalucia, the Canaries, Extremadura, Castilla-La Mancha and other regions in the central belt.”
As fraud increaseds between 2008 and 2012 areas with concentrations of big business, national and international, have been least affected. Those areas include Madrid, Barcelona Tarragona and La Rioja. But the fact big businesses in those areas tend to be above board, does not necessarily mean a bigger tax take. Many international companies can take advantage financial instruments to pay their tax in countries like Ireland and Luxembourg, so the Spanish tax man loses out anyway.
The report does not include figures from the Basque Country, Navarre and Ceuta and Melilla, which have different tax systems.
The report highlighted that 70 per cent of money used in the black economy consisted of €500 notes.
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