In Spain, one-third of those officially classified as unemployed are thought to be employed in underground economic activities. In Portugal, several top government officials have been forced to resign in recent years after being caught evading taxes. Greece's efforts to crack down on tax evasion have led to nationwide strikes. Russia and Eastern Europe. However, as Figure II shows, the largest underground economies of the area unquestionably exist in the formerly Communist countries.
Tax evasion is so rampant that it has caused a financial crisis for the central government.
Similar problems exist in almost every former Soviet republic, including Ukraine, Georgia and Moldova. The situation is little better in the former Communist Bloc. A 1996 study by the prime minister's office in Hungary found that 17 percent to 25 percent of the average family's expenditures were in the black market. Earlier this year, Serbia demanded that all property and vehicle sales be transacted through the banks, in an effort to stamp out cash-only sales in the underground economy. There does not appear to be a single country in Europe in which the underground economy is not a large and growing problem.