Black market still quarter of Lithuanian economy

More than a quarter of Lithuania’s economy still exists on the black market, according to the Lithuanian Free Market Institute‘s research into the country’s shadow market.

The research found that Lithuania’s black market was found to creates 26% of the country’s added value.

The black market was most wide-spread with excise goods, making up 22% of the liquor market, 20% of the cigarette market, and 15% of the fuel market.

“Though the black market is shrinking, it clearly remains a significant problem. That won’t change until the government changes its battle plan. The survey revealed that the current methods, based on catching and punishing offenders, does not draw people away from the black market or from the purchase of illegal or unaccounted goods,” said Vytautas Žukauskas, vice-president of the Lithuanian Free Market Institute.

The Institute’s survey revealed that 42% of the country’s inhabitants purchased items from illegal vendors and 63% purchased unaccounted products from legal vendors.

“About 70% of residents say that the reason for the black market is high taxes. The black market is like a protest against the government. People will buy illegal goods as long as buying legal ones is difficult. The majority of the price of excise goods consists of taxes: when buying alcohol, the state receives 60% of the price paid. When buying fuel, the state receives more than half. When buying cigarettes, the state gets 80%. The affordability of excise goods, due to high taxes and relatively low Lithuanian incomes, is among the lowest in the European Union. People buy illegal goods because they can’t afford them otherwise,” said Žukauskas.

LRT