Slovenia Targets Grey Economy in Push to Boost Public Finances

Slovenia, a small euro-zone state that has recently caused major headaches for the European Union, has settled on a series of measures aimed at boosting tax revenue and stabilizing its public finances, The Wall Street Journal Emerging Europe blog reported. Its government said Thursday it would generate 200 million euros ($266 million) a year from fresh taxes by fighting the grey economy. The cabinet approved a plan to clamp down on tax evasion, curb undeclared employment, limit large, undeclared cash payments and other similar steps. While the move headline revenue figure is small, the government said the steps would eliminate roughly half of the country’s black market. The announcement comes less than a week after Slovenia put two small banks into receivership in a bid to stave off potential runs on larger financial institutions that are burdened with bad loans. The ex-Yugoslav republic of 2 million accounts for only 0.4% of the euro zone’s economy but is on the verge of becoming the sixth member to seek international financial aid. Its banking sector, dominated by three state-controlled lenders, is teetering under some EUR7 billion worth of non-performing loans, equal to about a fifth of the country’s annual economic output. Read more. (Subscription required.)