Tax Evasion Costs Governments $3.1 Trillion Annually, Report Says

New York Times
November 28, 2011

Governments worldwide lose more than $3.1 trillion in annual revenue because of tax evasion, according to a report published Friday.

The equivalent of more than 5.1 percent of global gross domestic product never reaches the coffers of 145 national governments in the form of taxes, according to the report by The Tax Justice Network, an independent group that promotes financial transparency.

The report is based on figures from the World Bank. The lost taxes are mainly from the shadow economy, or cash transactions that were hidden deliberately from the tax authorities.

“If more had been done to tackle the rampant tax evasion, Europe would not be facing a crisis today,” Richard Murphy, the author of the report, said in a statement. Italy loses €183 billion, or $242 billion, to tax evasion a year, and its debt of €1.9 trillion represents just over 10 years of tax evasion, he said.

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