POLAND

Poland – The gray area is shrinking

The share of the gray area in the Polish economy will amount to 17.2 percent this year. – estimates the Institute of Economic Analyzes and Forecasts (IAPG) in its latest report “Gray Area 2019”. It will mean another fall in the so-called gray area in relation to GDP – in 2015 its share reached 19.2 percent.


Particularly good effects can be seen in the tobacco industry. In 2018, the estimated value of cigarettes smuggling to Poland and illegal production amounted to PLN 4.1 billion, while in 2015 it was PLN 5.9 billion – IAPG calculated. In turn, Almares research shows that the share of cigarettes from the gray area in the entire market dropped to 11.4 percent in the third quarter of 2018 from 19 percent at the peak moment in the second quarter of 2015.

We have several factors that cause the gray area to shrink. On one hand, it is a very good economic situation, which means that entrepreneurs are less inclined to hide their activities – he explains. On the other hand, the effects of public institutions in combating criminal activities (eg. in the drug, tobacco or illegal gambling industry) and sealing the tax system brings some effects. – Bohdan Wyżnikiewicz, the President of IAPG, comments.

In turn, sealing the tax system is best seen in VAT.

According to our preliminary estimates, the VAT gap in 2018 amounted to 7.2 percent potential inflows, while in 2015 every fourth zloty did not reach the state budget – says Grzegorz Poniatowski from the Center for Social and Economic Analysis, which counts the VAT gap in Poland, among others for the European Commission.

The shrinking of the gray area is a good trend, but there is still a lot to do. – The labor market is the nucleus of the gray area. For example, we estimated that in 2018 Poland could work even more than 1.14 million foreigners, of which half a million are black – says Wyżnikiewicz. – It is not always about a full-time job in a factory or on a construction site, it can be odd jobs, part-time jobs, trade, gastronomy or in the elderly care. Such activities are rarely registered – explains Wyżnikiewicz.

And he adds that the gray area is characterized by the fact that new manifestations of it are constantly appearing, just as recently in the passenger transport market.

 

– But it is worth trying to reduce its size, mainly by reducing bureaucracy and burdens for companies – emphasizes Wyżnikiewicz.

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