Unregistered Economic Activities During the Greek Multidimensional Crisis

Abstract

The authors state that the political, economic and social dimensions of the Greek multifaceted (economic, banking, social and sovereign debt) crisis have turned attention to the size and impact of the unofficial to the official economy. The relation between corruption and the unofficial economy in Greece and their role in the Greek crisis have stimulated discussion at an international level about the potential of unregistered economic activities to provide economic succor in times of crisis. This chapter builds on this discussion and explores whether the unofficial economy is a substitute for the official economy in economic downturns and by what means there can be a transfer of a part of the unofficial to the official economy (i.e. to register unregistered economic activities which deliver lawful goods and/or services). The exploration is based on data from an EU THALES research project about the size, causes and impact of the shadow economy in Greece. The focus of the research is on the least explored aspect of tax compliance in Greece, namely tax morale. The findings on the level of tax morale amid the crisis contribute to the ongoing international debate on enforced versus voluntary tax compliance (slippery slope framework) and highlight the factors favoring the transfer of unregistered economic activities to the official economy in Greece.