Surveys about black activities in Denmark and the relevance for the Danish Central Tax Administration

1
Surveys about black activities in Denmark and the
relevance for the Danish Central Tax
Administration

• Søren Pedersen, The Central Tax Administration

2
Contents

• Show data on black activities measured by means
  of questionnaire surveys in Denmark 1980-2005 and
  its neighbouring countries 1997/98-2001
• Definition of what is understood by black
  activities
• Characteristics on who are most active
• Social norms in Denmark regarding black
  activities and tax evasion
• The Danish Tax authorities use of these results
• Information campaign towards especially young
  people
• New legislation with new control means

3
Definitions

• The black economy consists of two parts
• Black activities to less than full prise, where
  both the doer and the buyer benefit form the
  activities not being declared They so to speak
  share the taxes and VAT saved. Also included are
  black trades f.i. a farmer who sells a pig or
  potatoes (but again both the seller and buyer
  should benefit)
• Tax evasion is the case where only the doer has
  knowledge and an advantage, f.i. a self-employed
  who does not register all his sales at normal
  full price on the cash register
• This definition has been developed by former head
  of the Rockwool Foundation Research Unit, Gunnar
  Viby Mogensen, and adopted by his followers at
  the Rockwool Foundation

4
Figure 1. Black activities in Denmark measured by
means of questionnaire surveys by the independent
Rockwool Foundation Research Unit, 1980-2005.
Percent of GDP.
Sources Gunnar Viby Mogensen, 2003,
Skattesnyderiets historie. Claus Larsen, 2002,
Underdeklaration af personlig indkomst målt ved
sammenligning af dansk skatte- og
nationalregnskabsstatistik. Claus Larsen, 2006,
Nyt fra Rockwool Fondens Forskningsenhed. April
2006
5
Figure 2. Proportion of the population in the
18-74 age group who has carried out black
activities within the last year in Germany, Great
Britain and Scandinavia by sex

• Source Søren Pedersen, 2003, The Shadow Economy
  in Germany, Great Britain and Scandinavia. A
  measurement based on questionnaire surveys. The
  Rockwool Foundation Research Unit, Copenhagen.

6
Figure 3. Proportion of the population in the
18-74 age group who have carried out black
activities within the last year in Germany, Great
Britain and Scandinavia by age

• Source Søren Pedersen, 2003, The Shadow Economy
  in Germany, Great Britain and Scandinavia. A
  measurement based on questionnaire surveys. The
  Rockwool Foundation Research Unit, Copenhagen

7
Figure 4. Black activities at less than full
price in Denmark in the years 1998 and 2001 by
industry

• Source Søren Pedersen, 2003, The Shadow Economy
  in Germany, Great Britain and Scandinavia. A
  measurement based on questionnaire surveys. The
  Rockwool Foundation Research Unit, Copenhagen.

8
Figure 5. High but falling accept of black
activities at less than full price in the Danish
population
9
Figure 6. The payment for black activities
according to the Rockwool Foundations survey in
1998
10
Information campaign towards young people Think
what would happen if everybody carried out UDW
11
Information campaign towards young people Think
what would happen if everybody carried out UDW

• The campaign shows a series of situations of
  what might happen to society if nobody pays
  taxes.
• Purpose Is not to moralize but to make
  especially young people think of why we are
  paying taxes. The information campaign was very
  much inspired by a similar campaign from the
  Swedish tax authorities
• The film spots were very short and with no
  speaking. They showed for instance a supposed
  football field with a broken crossbar and the
  field itself merely as a ploughed field
• The television spots was supported by posters in
  the bigger cities and advertising in national
  newspapers and free post cards (so-called
  go-cards) in cafés.
• This information campaign were again supported
  by a campaign towards young people attending
  school in the end of basic school (8th and 9th
  grade) which has been running now for over 10
  years.

12
Figure 7. The Danes attitudes to the question
To what degree do you approve or disapprove of
tax evasion if the possibility is present. By
gender and age in 1997, 2004 and 2006. Average on
a scale from 1 (total disapproval) to 10 (total
approval).
13
New legislation for inspection rights

• Up until 2006 tax authorities only had the right
  to inspect companies on domiciles.
• Especially a problem in the buildings industry
  in order to reveal the use of undeclared workers
  since construction companies very rarely do
  business at their own domicile
• In 2006 there was passed new legislation in
  order to give the tax auditors access to building
  sites
• This new power is regarded as a big improvement
  to tax authorities
• The right to control only goes as far as
  building sites that have never been a habitat,
  i.e. industrial building sites or new housing
  development (including the construction of new
  summer houses)