Mastercard poll: Serbians concerned about underground economy

Sales tax unlikely. Arilje, March 2017. [Sasha Popovic/Flickr]

The shadow economy limits the state’s ability to provide public services, according to 2/3rds of Serbians surveyed. 8 out of 10 say it inhibits growth. For a country in which undocumented trade accounts for 30% of its GDP, the concern could not be clearer. EURACTIV.rs reports.

Conducted by IPSOS for Mastercard in ten Central and Eastern European countries (CEE), according to the poll data, documenting such detailed concern was hard. To wit, 85% of the respondents had never heard of the shadow economy, though 75% could link it to undeclared employment.

An earlier survey in Serbia shows that that almost two-thirds of businesspeople believe that their own operations are endangered the most by companies operating in the underground economy. They, too believe that suppressing it, as an obstacle to creating a functional market economy, should be among the government’s priorities.

According to Tax Authority Director Dragana Marković, one of the generators of the shadow economy in Serbia are “laundering” or “phantom” companies.

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In 2016, she pointed out, tax inspectors identified 151 such companies, and from January to April 2017, 43. “We are trying to discover such companies early, because they actually help the regular business entities avoid paying their dues,” Marković said.

Over 80% of respondents in CEE countries are against the underground economy, urging their governments to fight it. The citizens of these countries show a readiness to change their shopping habits, if they understand that non-cash payments and taking fiscal receipts help in the fight against illegal trade.

“In the surveyed countries, 69% of those polled understand that the grey economy reduces the funds intended for education, health care or road infrastructure,” Mastercard said.

It added that almost approximately one-half of those polled in the CEE region (45%) take their receipts only when they know they will need them.

CEE consumers, however, are not particularly aware that non-cash payments can contribute to suppressing the shadow economy. Only 37% think that the use of credit cards instead of cash is a way to do so, while in Hungary only 13% are of that opinion.

The poll also shows that almost 80% of those surveyed in the CEE region would like to pay electronically more often – 60% in Slovenia, 63% in Bosnia and Herzegovina, 82% in Serbia and 85% in Romania – if, that is, they are aware that electronic and registered transactions can contribute to suppressing the underground economy.

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Mastercard’s General Manager for the Balkans, Artur Turemka, said that the poll reveals that people across the CEE region are “allies of government in the fight against the grey economy”.

In May, the Serbian government’s coordinating body for directing activities on reducing the shadow economy adopted a new Action Plan for 2017 and 2018, envisaging additional measures to reduce the volume of illegal trade, undeclared work, and tax evasion.

The coordinating body said that the goal of the new 107 point Action Plan is the establishment of more efficient supervision of the flows in the underground economy, improving the functioning of the fiscal system and reducing the administrative burden on citizens.

Among the plan’s novelties are measures to strengthen the capacity of the Tax Authority, development of the e-inspector software, and the organising of joint trainings for prosecutors and inspectors to ensure more efficient action against the underground economy.