Data from the Independent Authority for Public Revenue show tax arrears totaled 182.5 billion euros ($214 billion) on Aug. 10, according to a note sent from the agency to parliament last week and seen by The Associated Press Wednesday.
“The Greek government is owed so much in tax arrears from households and companies that it could pay off more than half its massive public debts if it collected it all,” writes AP, adding “unfortunately for the government, that’s unlikely to ever happen.”
However, as KeepTalkingGreece.com reports, more than 80 billion euros of that represents interest and fines on delayed payments from debtors that include companies that have been out of business for decades.
The arrears come close to Greece’s total economic output, estimated at 184.7 billion euros ($217 billion) this year, and Greece’s total public debt is worth about 180% of these arrears.
Eurozone-member Greece repeatedly raised taxes during its international bailouts between 2010 and August 2018.
Some 3.7 million Greeks – about 60 percent of the total – are behind on tax payments, and while the EU governments have attempted to crack down on the so-called shadow economy, black market activity still thrives in Greece.
As Statista’s Niall McCarthy notes, examples of black market activity are pretty common, whether it’s a warehouse worker driving an unlicensed taxi between shifts, an electrician accepting cash payments without declaring his earnings or a simple drug deal in a shady alleyway.
However, the level of black market activity, also defined as the shadow economy, depends highly on your country of residence. Generally defined as businesses and individuals engaging in inappropriate practices without complying with certain legal obligations such as paying tax or maintaining acceptable standards of employment, the shadow economy costs governments around the world trillions of dollars every year.
According to the IMF, heavily regulated economies with weaker administration tend to have well-established shadow economies. It’s far smaller in natons with strong, well-regulated and efficient government institutions. Back in the late 1990s, this was readily apparent in former Soviet states like Georgia where the shadow economy was estimated at 64 percent of GDP.
Today, the shadow economy is booming across southern Europe, though the scale of underground activity can only be measured indirectly.
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According to a new study published by the Institute for Applied Economic Research at the University of Tübingen in Germany (IAW), Greece’s shadow economy is estimated to average 21.5 percent of GDP. In the United States, undeclared cash transactions seem to be rarer with IAW’s study placing U.S. shadow economic activity at 5.4 percent of the country’s GDP.