Measuring the Underground Economy by the System of National Accounts

Abstract

The underground economy is a phenomenon that can be found in all political, social and economic systems in all phases of their development, but it appears in different proportions and with different intensity. It need not always be considered dangerous to a system. In some economic and political systems it is a necessity that supplements the legal economy and lessens social tensions. The unofficial economy is made easier by the existence of 'holes’ in the legal and institutional framework, 'holes' which are unavoidable in the initial developmental phases of a new economic system. The unreported economy has its negative and positive effects on the economy as a whole. The negative effects are, for example, tax and contributions evasion, which results in the need to distribute the obligation to finance public goods among legally, registered economic entities. Indirect taxes are tax levies for production, acquisition, sale or use of goods and services as well as import levies.