Italy's underground economy amounts to 17% of the GDP

Interest fact: Italy's underground economy amounts to 17% of the GDP. I'm pretty sure the actual figures are even higher, probably 20 to 30%.

Italy's underground economy was worth between 255 and 275 billion euros (about $319-344 billion) in 2008, state-run statistics agency Istat said Tuesday.

That amounted to 16.3 percent to 17.5 percent of the total output for Europe's fourth-richest country.

The agricultural sector was the largest component of Italy's undeclared economy, responsible for 32.8 percent of untaxed activities, according to Rome-based Istat.

Around three million people in Italy's so-called black job market, wages are untaxed and workers receive little or no benefits like pension contributions.

Italy could use the money with public debt in April reaching a record high totalling 1.813 trillion euros and tax revenue falling 1.8 percent in the first four months of 2010 to 104.8 billion euros.

In May, the government lowered its growth forecast from 2.0 percent to 1.5 percent for 2011. The government expects output to grow by one percent in 2010 and by 2.0 percent in 2012.

While the report sees this as negative, you must understand that they take a statist point of view. On the other side, I see this as greatly beneficial for the Italian people for the following reasons:

• People pay lower prices to get the same service, avoiding the parasitic-middle-man (the State) which without providing any added value, taxes about 20% VAT, and then anywhere from 10 to 50% income tax on the profits generated.
• The lower the amount of money pocketed by the state in the current condition, the better (remember that government is contributing negatively to the economy, due to corruption, lack of competitive markets, giving away money and jobs to their friends and family, and generally speaking, all the issues of Central Planning).
• The lower the government income, the higher the likelihood of it's collapsing. Then we might finally be able to start on newer better more effective foundations.

While looking for this news about Italy, I came across HavacScope, a web site dedicated to underground economic data. Pretty interesting, though I'm not sure how they source their data — which coincidently is very different from these official ones for Italy.