Foto: BB.LV / деньги в конверте
This was stated by the chairman of the State Commission on Competitiveness in the podcast [tv3.lv](https://tv3.lv/zinas/ekonomika/pikis-un-gevelis/enu-ekonomika-pazud-miljardi-sauka-skaidro-kadel-latvija-nespej-risinat-so-problemu/) "Piķis un ģēvelis!". ### A fifth of the economy remains in the shadows Undeclared income, envelope salaries, unofficial employment — all of this continues to be a serious problem for the Latvian economy. According to Arnis Sauka, who has been researching the shadow economy for many years, its scale still amounts to about 20% of the country's economy. At the same time, it is impossible to accurately determine the volume of income hidden from the state. That is why estimates of the shadow economy always have a certain degree of error. However, according to the professor, we are talking about huge sums. > "It's billions. It's a lot, it's huge money," emphasized Sauka. He believes that even a small reduction in the shadow sector could significantly improve the financial capabilities of the state. ### Even a tenth could help the budget According to the economist, Latvia does not necessarily need to immediately achieve complete eradication of the shadow economy to see tangible results. It is enough to bring at least part of the hidden income into the light. > "If we could bring at least a tenth or a twentieth of these funds out of the shadows, it would cover expenses," noted the professor. Additional tax revenues could be used to finance healthcare, education, science, defense, and the internal affairs system. Sauka himself admits that he would personally prefer to direct more funds towards the development of science, but there are needs in almost all state sectors. At the same time, it is important to consider that the volume of the shadow economy is not equal to the sum of lost taxes: additional budget revenues would depend on which specific incomes could be legalized. ### "It's easier to borrow money than to carry out reforms" One of the main reasons for the slow reduction of the shadow economy, Sauka believes, is the insufficient attention of the state to this problem. According to him, the fight against unofficial income and employment has not become a real political priority. > "It cannot be said that nothing is being done, but a significant part of all these measures has already exhausted itself," stated the professor. He is convinced that new approaches are necessary for further progress. In particular, closer cooperation between ministries and state institutions is required, as well as effective information exchange between various systems. However, such changes take time, coordinated work, and political will. Sauka notes that it is often easier for the state to attract borrowed funds than to carry out reforms, the results of which will only become apparent years later. ### Why state priorities constantly change Another problem that the economist pointed out is the inconsistency of state policy. According to his observations, authorities regularly switch from one relevant topic to another. At different times, the focus has been on reducing bureaucracy, healthcare, education, or defense. However, long-term tasks that require systematic work often take a back seat. As a result, many initiatives are not completed, and problems persist. Reducing the shadow economy, Sauka believes, cannot be ensured by separate short-term campaigns. A consistent policy over many years is necessary for this. ### Who should compel the authorities to address the problem The professor is convinced that the responsibility for reducing the shadow economy does not lie solely with state institutions. The media, business organizations, and industry associations can play an important role. They are capable of regularly reminding politicians of the scale of the problem and the need for concrete solutions. According to Sauka, constant public attention would help prevent a situation where the fight against the shadow economy again ends up at the bottom of the list of state priorities. Without systemic changes, Latvia will find it difficult to achieve a significant reduction in unofficial economic activity and increase tax revenues necessary for financing public services.
