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The Economy Ministry Workers Union (GESTHA) estimates that tax fraud in Spain in 2009 will be 25 billion Euro, which is equal to 10% of GDP.
"The number of labourers paid under the table has almost tripled in the past five years and the illicit cash economy has taken off as Spain languishes in a deep recession," Lorenzo Amor, Head of the National Association of Autonomous Workers (ATA) told Business World.
Economy Minister Elena Salgado said, "this year, the battle against tax fraud will be an important source of revenue, around 30% more than last year. Our inspectors must be even more strict and determined."
According to the Economy Ministry more than 27 billion Euro have been clawed back from tax dodgers since 2005.
Spain has the highest unemployment rate in Europe already and government estimates reveal that the rate will be close to 20% by early next year. One in five workers in Spain is therefore jobless and over a million homes don't have a single household member in official gainful employment.
Lorenzo Amor explains, "without condoning the practice it is clear that if Spain didn't have an informal economy, there would be unrest."