€2.1 trillion! That is the estimated amount of tax revenues lost to the shadow economy in Europe this year, according to a recent report in European CEO Magazine.  And that is just in Europe: imagine what the global figure must be! What more do you need to know to recognise that our tax systems and the way we are governed need a serious overhaul?
The “shadow economy” is, by definition, a tacit admission of the extent to which people will go to avoid paying taxes. And when it reaches such massive proportions it becomes blatantly obvious that there is something fundamentally wrong with our tax systems and clear evidence that something needs to be done about it. Particularly at a time of economic turmoil when national debts threaten the stability of the whole global economy.
And if that isn’t enough to frighten you and convince you of the need for action, factor in the “legitimate” tax avoidance that is so endemic in the world today. This, with its consequences is what I am depicting in “The Democracy Delusion.” The shadow economy is to some extent the inevitable consequence of ordinary people reacting to what they consider to unreasonable taxes and tax rates. Yet, it no more than a reflection of what is occurring legitimately in the real economy and all this is combining to put our tax systems under enormous strain.
The concept of progressive tax is intrinsically undemocratic. It is the result of a social engineering effort to redistribute the wealth and narrow the gap between the rich and the poor. Now, however, they are doing the exact opposite, as is manifestly evident from the growing wealth gap. This is in no small part due to the fact our tax systems are becoming more unfair with lower income earners are paying a greater proportion of their earnings in taxes while the wealthy and large corporations are able to exploit tax avoidance legislation.
If this continues, it poses a serious threat to the very fabric of society.
That is why we need to rethink our whole approach to the way we levy taxes. The idea of a universal tax rate is not a new one, and the call for it is becoming more widespread, although it does not get the air-time, discussion and debate that it merits. This is something I am trying to change “The Democracy Delusion”. In doing so, however, I am not just ranting about the inequity of the systems or regurgitating others’ ideas. Rather, I am attempting to show how the tax system is exacerbating an already flawed system and proposing an entirely new basis for levying taxes that is more democratic but not only as the result of a uniform, universal tax rate.
These are just my ideas, but I urge to read the book and consider them and whether they have any merit. If they do, then I would ask you to do all you can to rally support so we can start to make them a reality and enable a better future.
 “The shadow economy” CEO Magazine, October 2013 http://www.europeanceo.com/home/featured/2013/10/the-shadow-economy/