Bulgaria ‘Loses €769m’ from Tax Evasion
Economy, General News, Politics, Region Tuesday, November 18th, 2008
17 November 2008 Sofia _ Bulgaria loses some 1.5 billion levs (€769 million) a year from tax evasion at the labour market as nearly half of its people are employed unofficially in the “grey economy,” a study shows.
The study by Bulgaria’s independent pollster Mediana, sponsored by the Social and Labour Ministry, showed that 48 percent of the officially employed receive payments totalling 4.2 billion levs a year that are not being taxed.
“Almost half of the labour market has one foot in the grey economy,” Mediana’s chief executive Kolio Kolev told a news conference.
People who work without contracts get some 600 million levs a year of unofficial salaries, the study showed. The real average monthly wage in the country is about 667 levs, while the officially declared wage is about 490 levs, Kolev said.
Tax cuts and improved government controls have shrunk the European Union newcomer’s unofficial economy by about one-third in the past five years, but its share still remains large, the independent Centre for the Study of Democracy said in a report earlier this year.
The Centre for the Study of Democracy, Bulgaria’s most-respected anti-graft organisation, estimated that unofficial economic activity in Bulgaria accounts for between 25 and 35 percent of the economy.
Kolev, however, said that if the grey economy was wiped out some 150,000 people would lose their jobs.
“An attempt to destroy the grey economy would be equal to a suicide,” Kolev said.
Bulgaria’s jobless rate in September edged down to 5.8 percent but is likely to increase next year because the global financial crisis has already forced job cuts in some sectors.
Metals, mining and chemicals businesses have been hit by a global drop in commodity prices and weaker demand in recession-hit western Europe, Bulgaria’s main exports market. Some firms have halted output, while others cut staff.
The country’s leading business organisation, the Bulgarian Industrial Association, forecast that 50,000 people would lose their jobs in the coming three months, local media reported.
Social Minister Emilia Maslarova played down the impact of the financial meltdown and told the news conference the jobless rate should not exceed seven percent in 2009.
Contributed by Balkaninsight
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