Black economy in Portugal “on a roll”

Portugal’s black economy is back in business. After a dip in 2013 when it fell to 26.81% of GDP and looked like being tackled head-on by a government rolling up its sleeves eagerly for the job, the last couple of years has seen all the ‘progress’ lose ground. In fact, we’re back with a growing parallel economy of the kind not seen since 2010.

The news comes from OBEGEF, the Observatory on the economy and fraud management.

In a press conference in Porto earlier this week, OBEGEF’s president Óscar Afonso revealed that figures for last year show Portugal’s black economy is approaching 27,3% of GDP – which translates into almost 49 billion euros worth of financial transactions that dodge tax.

This sees Portugal massively ‘exceeding’ the OECD average of 16.4% of GDP, and the State, of course, facing the consequences.

Giving an example, Afonso explained that if the black economy suddenly start operating above the radar, Portugal “would have registered a surplus of €4.193 billion for 2015”.

The OBEGEF study was unclear over what fuelled the propensity for fiddling. It “could be the taxes on families and businesses, social security contributions and the intensity and complexity of law and regulations, the inefficiency of Public Administration and/ or the lack of credibility of sovereign organs before the conduct of some of their representatives”, reports Expresso.

The traditional image of everyone in Portugal evading the taxman in some way or other has also “created the impression that crime pays”, said OBEGEF’s fiscal council director Carlos Gomes Pimenta, stressing the report’s bottom line: that the growth of the black economy leads to “distortions in competitivity between businesses”, the “limiting of democracy” and the “weakening of solidarity and mutual respect” between citizens and their representatives.

Predicting the situation is set to perpetuate, OBEGEF’s president Afonso said the only way to stop the rot was a “much faster justice system, education in civil society” and more efficient measures of combat. But, faced with the country’s inherent “fiscal morality” and “recent repression” exercised by the AT tax authority, he intimated that this looks unlikely to happen any time soon.

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