The pandemic gives a push to the underground economy

Lockdowns and restrictions for Covid have reduced economic activities that escape the tax authorities, but also undeclared work and proceeds from criminal trafficking. This is what emerges from the latest Istat study relating to 2020. It is, however, a treasury of almost 175 billion euros on which no taxes have been paid

Covid has also given a blow to the economy that escapes any type of control, from criminal activities to illegal work, passing through false, or incorrect, declarations to the tax authorities. Lockdowns and restrictions of various kinds, Istat tells us, in 2020 put a stop to this dark side of our country, with a much greater reduction (-14.1% per year) than that recorded by the Gross Domestic Product, which fell two years ago as it had not happened since the Second World War (-7.6%).

A treasure that has escaped control

However, we are talking about an enormous treasure: almost 175 billion euros (203.3 in 2019), money that would be enough for four financial maneuvers. Furthermore, it could – so to speak – be an optical illusion: the crisis caused by the pandemic was an exceptional event and it is possible that the recovery of 2021 has given a boost to activities that live in the shadows.

Undeclared work decreases

In total, what is called the ‘unobserved economy’ is worth 10.5 per cent of national wealth (from 11.3% in 2019) and for the most part (157 billion) it is due to companies which – for example – report less business than real ones or to under-the-counter rents or – again – to irregular work (therefore without contributions), which, although decreasing, represents 40 per cent of the undeclared. To all this is added the illegal part, with a turnover estimated at over 17 billion, thanks above all to drugs, smuggling and prostitution.

The evasion remains at stellar heights

For all these money, obviously, not a single cent of taxes was paid, but Covid could also have had an impact on the evasion of taxes and social security payments. Waiting to understand it (an updated data for 2020 is still missing), we remind you that in 2019 the evasion was down (to 99.2 billion) but still at stellar heights.