Development and Finance from issue 2007/2

Szabolcs Vámosi–Nagy

The Untaxed Economy

- Abstract -

In Hungary, there are various names given to the part of the economy that eludes and avoids paying taxes.  I think it is most appropriate (and accurate) to call it what it is, and speak of the untaxed economy. What can be dones gains it? 1. Strengthening of administrative systems. It is simply unacceptable that when a substantial portion of employment is on the black market, 170 inspectors are employed nationwide by the labour authorities (with some only looking at the compliance of attendance sheets). 2. Income register. We can only imagine whether the massive production and social subsidies reach their set destinations. 3. Improvement of tax awareness. This does not cost too much, though any direct benefit is difficult to pin down. 4. Investigation and punishment. Avoiding the payment of taxes and contributions is not a ‘forgivable sin’ but is stealing from the community.

Szabolcs Vámosi–Nagy, honourable associate professor (Szent István University), tax specialist (Ernst & Young)

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