OpenEconomics has analyzed an often overlooked question in the publicdebate: what would have happened to the economy if those resources had been collected by the State and reinvested through public spending?
The economic effects oftax evasion vs. public spending
The 2023 Update Note to the Economic and Financial Document (DEF) reported that in the period 2018–2020, Italy’s total tax and contribution gap reached €96.3 billion, with €84.4 billion attributable to tax evasion. But which scenario—evasion or collection—has a greater impact on GDP?
The impact of tax evasionon Italy’s GDP
According to the analysis, €84.4 billion in tax evasion generateda GDP impact of around €170 billion, by activating production chains and consumption through household spending.
However, in an alternative scenario where the same amount was collectedand invested by the Public Administration, GDP would have reached €203 billion, resulting in a net gain of €33 billion.
The role of indirect taxrevenue
Important fiscal differences also emerge:
- With evasion: €41 billion in indirect and induced tax revenue
- With public spending: €53 billion in additional tax revenue, thanks to redistributive effects and greater economic circulation
Evasion, inequality, andredistributive benefits
The analysis goes beyond mere monetary value. Tax evasion benefits only a few, while public spending redistributes value across the entire community.
Resources withheld from taxation benefit only the evaders and, indirectly, the supply chains triggered by their spending. In contrast, public investment brings direct benefits to citizens, businesses, and public services, helping to reduce income inequality.
For more details, view the full report. (Report in italian)
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