The round table was held as part of a regional project by the International Trade Union Confederation (ITUC) on taxation systems, grey economy and corruption in Southeast European countries and attempts to improve management and democratic changes which is financed by the Norwegian government and Norwegian union confederation in cooperation with the ITUC.
Croatian union federations support the ITUC stance that tax evasion needs to be reduced and penalties against tax evaders should be tightened. The unions also support the idea to tax extra-profit made by banks and oppose a so-called flat tax rate.
President of the Independent Croatian Unions Kresimir Sever said that the grey economy had spread during the crisis and that this was fertile ground to exploit people who were without jobs and had no income.
This is most prevalent in the construction industry although this has been reduced in the meantime due to the shortage of work. Grey economy is also spread in tourism and trade, and is flourishing because of the high number of unemployed and people with blocked accounts due to distress, Sever said.
Secretary-General of the Alliance of Independent Unions of Croatia Boris Feis warned that Croatia had one of the highest Value Added Tax rates of 25% and that two-thirds of tax revenue in fact came from VAT and various surcharges while taxation on capital was below average.
Assistant Labour and Pension Systems Minister Marina Kasunic Peris said that the share of the grey economy in GDP was 30.4% and that two-thirds of this referred to undeclared labour.
Therefore, last year the European Commission requested Croatia to implement measures to combat undeclared labour. Amendments were made to legislation and according to the State Inspectorate, the number of people working on the 'black market' has been drastically reduced.
The head of the State Bureau of Statistics, Marko Kristof, considers that data of the share of the grey economy in Croatia being 30% is unreliable and that it is really around 10% and that this is not the grey economy in the traditional sense but "unnoticed economy" which is not accounted for in statistical research.