It is also known that high tax rates encourage tax evasion, which means less money in the state treasury. Tax evasion acts like a boomerang, because it increases the deficit and tax pressure, which mostly affects regular tax payers. The share of the grey economy in agriculture grows in line with the share of products with higher margins. It is interesting that the biggest differences are found between the retail and wholesale prices of carrots, pears and wine while the smallest differences are those of onions, apples and brandy. According to world research, the grey economy is larger in the sectors closer to the end consumer.
Trade is closest to the consumer.
Here too, official statistics tell one thing and reality tells another. On the other hand, the number of registered firms is growing. Some states do not interfere in the activities of the grey economy in order to maintain social peace. However, the costs of such business cause much more damage than social benefits to the state. On the basis of such official figures which suggest a recession, the state might apply expansionist policies when it should perhaps impose restrictive policies.