Grey economy in Bulgaria has grown by an average 3.4% on the year for the period 2007-2012, an analysis prepared by the Bulgarian Industrial Association (BIA) indicated.
The grey economy’s most significant growth of 5.1% was reported in 2010, BIA said in a press release.
The size of the shadow economy from 2008 to 2012 was estimated at 12.4 billion levs ($8.7 billion/6.3 billion euro), according to BIA.
For the period under review, the tax revenue growth is merely 11%, given that gross domestic product (GDP) rose 29% for the same period, Bojidar Danev, head of BIA, said in the press release.
The improved economic parameters have lead to an increase in the average monthly wage and the maximum taxable social security income for the period in revue in Bulgaria. However, this has not lead to a significant increase in tax revenues, as expected. There is, in fact, an opposite trend as the growth of tax revenues has reduced more than twice compared to GDP growth.
Tax revenues from GDP decreased by 48 percentage points in 2012 compared to 2007. Value added tax (VAT) revenues reduced by 21 percentage points despite the GDP growth.
The decrease in tax revenues is rather the result of unforeseen changes in the tax and security systems and the government’s inability to collect all tax revenues, not the result of the crisis, Danev noted.
BAI’s analysis examines the difference in volume of shadow economy in Bulgaria from 2007 to 2012.