aA
Lithuania‘s black economy ‘is bigger than entire state budget’
© Shutterstock nuotr.

The black economy in Lithuania is estimated to be worth more than €9 billion, or more than one billion euros more than the country‘s budget this year, which includes EU funding and other international supports.

Some estimates put the size of Lithuania‘s black economy equivalent to about a quarter of Lithuania's GDP, and Lithuania was among the top five countries with the biggest shadow economy percentage to gross domestic product.

Shadow economy research carried out by Lithuania’s Free Market Institute shows that over 57% of Lithuanians evaluate the likelihood of being caught working without a contract or receiving a part of salary off the books as ‘low’ or ‘very low’. In contrast, in Sweden, some 63% of Swedes evaluate the probability as a ‘high’ or ‘very high’.

“That €9 billion is important money and that is the money that is being lost because of poor economic policies,” said the president of the Free Market Institute, Žilvinas Šilėnas.

However, opinions vary on the exact size of the shadow economy in Lithuania: "The likely share is 15-16%, which is in line with data by Statistics Lithuania. Hence, to put it crudely, it is quite inappropriate to put the figure at 25% or 30%," says Dr. Ligita Gasparėnienė of Mykolas Romeris University.

When it comes to the purchase of illegal goods or services, about 78% of Lithuanians believe that the chance of being caught being illegal goods or buying goods without paying the appropriate taxes is very low whereas again in Swedent about 70% of Swedes are convinced that the probability of being caught while buying such items is high or very high.

“Estimates show that we could collect an additional one third of VAT but do not. There are also the envelopes or even sometimes large envelopes, which hide the payment to the employees, thus avoiding taxes. The third part of the black economy is avoiding excise duty on goods like fuel, cigarettes and alcohol,” said Nordea chief economist in Lithuania Žygimantas Mauricas.

Cigarettes, alcohol and fuel make up a big part of Lithuania’s black economy. For example, smuggled cigarettes account for about one fifth of the total cigarette market here, while illegal alcohol commands about 22% of the market. Illegal fuel sales account for 7% of gasoline and 11% of diesel sales.

LRT

|Populiariausi straipsniai ir video

Survey: more Lithuanians view Belarus as unfriendly state (2)

The number of Lithuanian residents considering Belarus to be an unfriendly state is rising amid...

Belarus: fish kill in River Nemunas near Grodno triggered by natural and climatic causes

The die-off of fish and other aquatic organisms in the River Nemunas near Grodno in Belarus was...

Lithuania hands over to Russia regarding serious environmental violations in Baltic Sea

On 3 July, the Ministry of Foreign Affairs of Lithuania handed over a verbal note to the Embassy of...

LGBT community calls on president to show solidarity and wear rainbow badge (5)

Representatives of Lithuania’s lesbian, gay, bisexual and transgender ( LGBT ) community and their...

First ladies discuss challenges brought by COVID-19 pandemic

Lithuania’s First Lady Diana Nausediene and Elke Budenbender, spouse of Germany’s president,...

Top news

Lithuania faces new educational trends in post-pandemic reality

Scientists predict the second wave of coronavirus, and this uncertainty encourages high school...

Chinese guide fluent in Lithuanian: difficult language but worth learning

Fluent in Lithuanian, Chinese national Yi Zhang says it was difficult to learn the Lithuanian...

Lithuania gives the green light to large-scale investors with sweeping reforms

The Parliament (Seimas) of the Republic of Lithuania has adopted a package of investment and corporate...

Survey: more Lithuanians view Belarus as unfriendly state (2)

The number of Lithuanian residents considering Belarus to be an unfriendly state is rising amid...

Maritime cluster has been founded in Lithuania

The business and educational organizations in Klaipeda are joining forces to develop the Lithuanian...

|Maža didelių žinių kaina