Shadow Economy Persists in Latvia Amidst Relaxed Cash Controls and Undeclared Construction

Latvia's persistent shadow economy is a significant concern, with recent developments suggesting a lack of progress in tackling it. Evita Goša, head of the Shadow Economy Combatting Working Group at the Foreign Investors Council in Latvia (FICIL), points to critical issues hindering efforts.

Goša highlighted that the removal of serious restrictions on cash transactions, particularly in the lead-up to elections, has undermined anti-shadow economy initiatives. She observed that private homes throughout the Pieriga region are being constructed "in the shadows," a clear indicator of undeclared labor and materials, and thus, untaxed income.

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It is no wonder that the shadow economy is not falling, if in the pre-election atmosphere the most serious restrictions on cash transactions have been removed from the plan to combat it, and private houses all over Pieriga are being built "in the shadows".

She emphasized that effectively combating the shadow economy necessitates more than just well-crafted plans. A crucial element is fostering public awareness that achieving the high welfare standards seen in Nordic countries is intrinsically linked to fair and consistent tax contributions. Without this societal understanding and commitment, efforts to curb illicit economic activities will remain insufficient.

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She stressed that for the fight against the shadow economy, it is important not only to develop good plans but also to achieve public awareness that without honest tax payment, we will not reach the welfare level of the Nordic countries.