The topic of tax evasion is always on the agenda and is often used as a cudgel in political debate. The fight against tax evasion (in the context of a criticism of the tax reform launched by the Meloni government) is one of the reasons for the strike proclaimed by CGIL and UIL for 11 April. It is important, then, to look for and evaluate the Istat findings on the unobserved economy or on the areas of activities and undeclared and in any case irregular work. The latest report was published by the Institute of Statistics in 2023 with data referring to 2021. In a nutshell, in the year considered the value of the unobserved economy (Noe) amounted to 192 billion euros: the definition includes those economic activities which, for different reasons, escape direct statistical observation.
The main components of the NOE are represented by the underground economy and the illegal economy. The underground economy stood at just under 174 billion euros, while illegal activities exceeded 18 billion. The definition of the underground economy includes all those activities that are voluntarily hidden from the tax, social security and statistical authorities, through false declarations regarding both the turnover and costs of the production units (in order to generate an under-declaration of added value), and the use of irregular labour. Compared to 2020, the value of the unobserved economy grew by 17,4 billion, but its impact on GDP remains unchanged (10,5%). Irregular work units were 2 million 990 thousand, with an increase of approximately 73 thousand units compared to 2020. The unobserved growth of the economy was driven by the trend in value added from under-declaration, which marked an increase of 11,7, 14,6 billion euros (equal to 2020%) compared to 5,7. The increase in added value generated by the use of irregular labor (9,2 billion euros, equal to 0,9%) and by activities illegal (5,0 billion euros, equal to XNUMX%).
In contrast, the other components of the underground economy showed a reduction of 0,8 billion euros (-5,5%) compared to the previous year, mainly due to a contraction in undeclared rents. The substantial stability of the unobserved impact of the economy on GDP is therefore the result of heterogeneous trends of its components. In particular, while the marked dynamic of under-declaration has brought its impact on GDP back to pre-crisis levels (5,0%), the less sustained growth in value added from irregular work has led to a further decline in its incidence (up to 3,7%, from 4,3% in 2019). The spread of the underground economy is linked to the type of reference market rather than the type of good/service produced.
Overall, the sectors where the weight of the underground economy is greatest are: Other services to people, where it constitutes 34,6% of the added value of the sector, Commerce, transport, accommodation and catering (20,9%) and Construction (18,2%). For Other business services (5,2%), the Production of investment goods (3,4%) and the Production of intermediate goods (1,5%) a lower incidence is observed. The Istat report identifies signs of a structural change in the underground economy. In 2021, although sustained, the growth of the shadow economy was in line with the economic recovery following the pandemic crisis. Consequently, the impact of the phenomenon on GDP remained constant at the level of the previous year (9,5%), when it had recorded a decrease considered significant (-0,7 percentage points compared to 2019). According to Istat, the stabilization of the incidence of the underground economy below the 10% threshold for two consecutive years is part of the context of a slow but continuous reduction of the phenomenon, which has been taking place in recent years.
Starting from the maximum recorded in 2014, when the incidence of the underground economy on GDP was 12%, constant reductions were observed in the following years, the most significant of which were in 2018 (-0,5 percentage points, to 10,7% ) and in 2020 (-0,7 points, to 9,5%). Until 2019, the contraction of the underground economy had been rather homogeneous for the different components and no strong deviations were observed in the sectoral trends. In the last two years, on the one hand, there has been an acceleration in the reduction of the component due to irregular work (the incidence of which on the total added value went from 4,8% to 4,2% between 2019 and 2021) and, on the other, a stabilization of the weight of under-declaration (which in 2021 returned to 5,6%).
According to the Report, the use of irregular work by businesses and families is a structural characteristic of the Italian labor market. In 2021, there were 2 million and 990 thousand full-time work units (AWUs) in irregular conditions, mainly employed as employees (approximately 2 million and 177 thousand units). Compared to 2020, non-regular work recorded a limited growth of 2,5%, which did not make it possible to recover the considerable drop recorded during the pandemic crisis (-18,4%) and seems to signal a reduction in the phenomenon. In general, the incidence of irregular work remains more significant in the tertiary sector (13,8%) and reaches particularly high levels in the Other services to people sector (42,6%), where the demand for irregular work services from part of the families. The presence of irregular workers in Agriculture (16,8%), Construction (13,3%) and Commerce, transport, accommodation and catering (12,7%) is very significant.
As for illegal activities, a recovery of the phenomenon was recorded in 2021, with a growth of 5,0% (equal to 0,9 billion euros) in added value compared to 2020, when the restrictive measures implemented to combat the pandemic had led to a contraction of the illegal economy. However, despite the growth of the last year, illegal activities showed a contraction of 1,1 billion in added value and 0,8 billion in final consumption expenditure, with an average annual decrease of 1,9 respectively. % and 1,3%. As of 2021, therefore, the overall value of the illegal economy has not returned to pre-crisis levels. A particular observation is made by Istat to VAT fraud whose hidden added value (both in the under-declaration component and in that from irregular work) represents an undeclared taxable amount for the purposes of the tax itself. The existence of a hidden added value, therefore, implicitly involves VAT fraud to the detriment of the treasury in the form of non-payment. VAT fraud, which originates from an unregistered transaction, can occur with or without the buyer's consent. In the first case, the contracting parties agree not to register the transaction and the tax flow does not occur: the buyer does not pay it and the seller does not collect it, thus generating no impact on the economic system. In the second case, however, the seller does not register the transaction and, therefore, does not pay the tax which is also included in the price of the goods paid by the buyer.
The Report stops at the analysis and does not propose - this is not Istat's task - proposals for solutions. In the debate on VAT fraud, many support the usefulness of the so-called conflict of interest or the possibility given to the private buyer to ''discharge'' the amount of the tax, at least for particular types of goods and services, in his tax return . It is doubtful whether the ''conflict of interest'' can implement the civic sense of the buyer if the transaction proposed by the seller has a significant economic impact such as that corresponding to the VAT rate. It would be more useful to make issuing the invoice convenient for the seller. In addition to strengthening electronic invoicing on an operational level, on an experimental basis the social security rules envisaged for freelancers could be applied - insofar as they are compatible: a part of the pension contribution, owed by the worker - could be charged in the context of the contribution calculation on the invoice to the customer.
