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Greek shadow economy estimated at 40 bln euros per year: survey

Xinhua, December 6, 2016 Adjust font size:

Greece's shadow economy is estimated at about 40 billion euros (43 billion U.S. dollars) a year, depriving the state coffers of some 16 billion euros (17.2 billion dollars) in taxes and social security contributions, according to a survey released on Tuesday.

On average, Greek citizens are spending at least 750 euros (802.5 dollars) per year on undeclared products and services, Macedonia University assistant professor Aristidis Bitzenis, who supervised the study, told Greek daily Kathimerini.

Greek experts noted that the steep recession of the past seven years has also hit the underground economy, which was estimated at 25.4 percent of Greece's gross domestic product in 2010, but shrank to 23.6 percent by 2015.

Regarding the reasons why Greeks are turning to the underground economy, Bitzenis said that a key cause was the spike in direct and indirect taxes and social security contributions.

For example, Greece's value-added tax (VAT) rate of 24 percent is among the highest in Europe.

Greece is among the EU member states with a low per capita income but a high tax rate, which could be up to 55 percent of income.

In addition, the percentage paid in social security payments is among the three highest in Europe, Bitzenis explained.

The report which was submitted to the Greek Labor Ministry calls for immediate measures to restrict the shadow economy.

It calls for a stable tax regime, more audits and stricter penalties for tax dodgers. Endi