One of the reasons often given for the reintroduction of invoice printing is that there was an increase in the informal economy in 2022 compared to 2019 – which does not make much sense, if you think about it, given that the obligation to issue invoices was not abolished under the previous government – it was only the printing of invoices that stopped. Former Director of the Financial Administration of the Republic of Slovenia, Ivan Simič, also pointed this out: “We are finally in the era of digitalisation, i.e., paperless commerce. The fact is that even after this change, invoices were still being issued and printed. There were very few who did not print invoices anymore,” he wrote in his blog, emphasising that it is, to say the least, frivolous to talk about an increase in the informal economy due to fewer invoices being issued, while at the same time, revenues have been increasing at a very high rate.
“In all this, I have not heard those in charge at the Ministry of Finance and the Financial Administration of the Republic of Slovenia say that in 2022, the revenues in the tax coffers were 4.67 billion euros higher than in 2019, and thus, tax revenues were also higher. So where is this informal economy happening?” tax expert Ivan Simič wrote on his blog, adding that this is also partly due to inflation and economic growth, but that this is by no means the only reason.
He went on to present the data he received from the Financial Administration of the Republic of Slovenia. It shows that, in reality, there is no trace of an increase in the informal economy. “We could talk about an increase in the informal economy if there was a decrease in invoice receipts at the tax office and, therefore, in tax revenue. In Slovenia, the opposite has happened,” he explained. Simič also presented a table showing the number of invoices issued in January and February over the last five years. It is clear from the table that the number of invoices issued decreased after March 2020 due to Covid-19, but this is perfectly normal, as there was an epidemic happening, and major restrictions on business were in place. “But in January and February 2022, the number of invoices issued increased and is getting closer to the old figures. So, this January, 69,710,431 invoices were issued, and it is expected that next year the number of invoices issued will reach the 2019 figure,” he predicted.
Simič also believes that the decrease in the number of invoices issued in February 2023 is in line with previous years, and he sees this year and the year 2022 as good years, compared to the previous two Covid-19 years. “Therefore, I do not see any evidence that there has been an increase in the informal economy, as claimed by the Ministry of Finance and the Financial Administration of the Republic of Slovenia,” he stressed, adding, “I leave it to you, dear readers, to give your opinion on how you understand these figures and whether the MPs and the media were misled when the aforementioned authorities reported a large increase in the informal economy, even though revenues have increased by 4.67 billion euros.”
“In order to study the phenomenon of the informal economy, we need to first define it in a uniform way, then measure or assess it and build on these results to develop policies, strategies and measures to curb it. Generalised, unprofessional and methodologically inadequate assessments of the causes and extent of the informal economy can lead to inappropriate decisions in tax, enterprise, social and other policy areas. Building all this on the wrong basis means that they may not achieve their objectives effectively enough or at all. However, official “assessments” are an important source for many international institutions as well, in assessing the state and risks of the fiscal and economic environment (OECD; IMF, European Commission), so this area requires an appropriate level of care and relevance. It is not professionally acceptable to make an assessment of the size of the informal economy on the basis of a single indicator (the number of invoices issued) that has never been subject to any professional assessment, analysis or research,” said the expert who has actively researched the issue of the informal economy in the past.
Talking about an increase in the informal economy due to fewer invoices being issued at the same time as recording a very high increase in revenues is, to put it mildly, frivolous, concluded Ivan Simič, former Director-General of the Financial Administration of the Republic of Slovenia, and Editor-in-Chief of the “Denar” (Money) magazine, adding for consideration: what if the informal economy was actually higher in 2019 than in 2022, because many invoices were issued, but revenues were lower than in 2022? The article, in which Simič also analyses some of the data in more detail, is available in its entirety here.