Poland's "Grey" Economy Still Thriving

For every Zl100 worth of goods produced by lawful, tax-paying companies in Poland, another Zl15 worth is produced for the "grey" economy to avoid taxes, the Central Statistical Office (GUS) said. GUS said in a recent study that most illicit activity takes place in officially registered companies which lower their tax burden by paying dues on only part of their output. The report stressed such activity would have increased GDP by 15.3 percent in nominal terms in 1998, down from a high of 17.2 percent in 1994 - the first year that GUS tried to estimate the extent of tax evasion. Poland's economy has blossomed since communism collapsed in 1989 with much of the initial entrepreneurial drive created by street vendors and other small businesses, which often took advantage of inefficient communist-era tax regulations. Over the past years successive cabinets have worked to limit the "grey" economy by introducing value added taxes.