A stick instead of a carrot in the fight against the shadow

As far back as in early 2009, LFMI forecast a record increase of the shadow economy, which has been confirmed by the findings of the recent survey of the Lithuanian economy conducted by LFMI. Its data show that, in 2009, the share of the shadow economy in GDP increased by 5%, as compared to 2008.  In 2010, the share of the shadow economy is likely to comprise 27% of GDP. The size and the spread of the shadow forced the Government take action. In his comments published in the newspaper “15min“, Vytautas Žukauskas, LFMI Policy Analyst, analyses proposals for decreasing the volume of unofficial economy that were put forward by the working group established by the Prime Minister. Regrettably, 22 out of 25 measures included in the plan are targeted at the stricter controls, regulation and increased criminal penalties for shadow activities.