"Increase tax revenue by curbing gray economy"

BELGRADE By curbing the gray economy, Serbia could increase its tax revenue by RSD 33bn (some EUR 296mn), or about one percent of GDP in the next three years. This data is contained in a study presented by the U.S. Agency for International Development (USAID) and the Foundation for the Advancement of Economics on Wednesday. "Increase tax revenue by curbing gray economy" The gray economy in Serbia saw a decline from 33.2 percent in 2001 to 30.1 percent of the GDP in 2010, it was said at the presentation of the study. The results show that the underground economy shrank during the period of economic growth, and then has remained virtually unchanged since the beginning of the crisis. U.S. Deputy Ambassador Earle Litzenberger underscores that it has been determined that the main reasons for doing business in the underground economy are: high taxes on labour, complex tax procedures, and high level of tolerance toward the employment in the gray economy. According to Litzenberger, the government has been incurring losses on tax revenue due to underground economy, while the effectiveness of economic assistance programs has been diminishing, with the companies operating in the underground economy remaining underdeveloped and unstable. One of the authors of the study, Professor at the Belgrade-based Faculty of Economics Gorana Krstic, stresses that the gray economy is making direct losses to the country's public finances, which is even more evident in the time of crisis. As she noted, the gray economy could bring only a short-term improvement in the standard of living of the most vulnerable, but in the long run it could be a trap, as instead of eliminating, it only prolongs their poverty. The experts noted that when considering the countries in the region, only Romania and Bulgaria have larger underground economies than Serbia. Tanjug

"Increase tax revenue by curbing gray economy"

The gray economy in Serbia saw a decline from 33.2 percent in 2001 to 30.1 percent of the GDP in 2010, it was said at the presentation of the study.

The results show that the underground economy shrank during the period of economic growth, and then has remained virtually unchanged since the beginning of the crisis.

U.S. Deputy Ambassador Earle Litzenberger underscores that it has been determined that the main reasons for doing business in the underground economy are: high taxes on labour, complex tax procedures, and high level of tolerance toward the employment in the gray economy.

According to Litzenberger, the government has been incurring losses on tax revenue due to underground economy, while the effectiveness of economic assistance programs has been diminishing, with the companies operating in the underground economy remaining underdeveloped and unstable.

One of the authors of the study, Professor at the Belgrade-based Faculty of Economics Gorana Krstić, stresses that the gray economy is making direct losses to the country's public finances, which is even more evident in the time of crisis.

As she noted, the gray economy could bring only a short-term improvement in the standard of living of the most vulnerable, but in the long run it could be a trap, as instead of eliminating, it only prolongs their poverty.

The experts noted that when considering the countries in the region, only Romania and Bulgaria have larger underground economies than Serbia.