German Government Losing Billions in Tax Revenue | Germany| News and in-depth reporting from Berlin and beyond | DW | 25.02.2009
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German Government Losing Billions in Tax Revenue

Paying taxes is never fun, especially during a recession. But there are a number of people in Germany -- from handymen to housekeepers – who have managed to get around that little problem.

Shadow of a man pushing a wheelbarrow cast onto a brick wall

One in five Germans has admitted to working under the table

Almost a third of German households are guilty of paying an average 1,000 euros ($1,286) under the table for services in 2007.

According to a report recently published by the Cologne Institute for Economic Research (IW), handymen top the list, with babysitters, housecleaners and gardeners not far behind.

The German Tax Workers Trade Union has estimated that the federal and state governments of Germany lose 30 billion euros each year in tax revenue due to undeclared wages.

The head of the union, Dieter Ondracek, told the German daily Berliner Zeitung that the states need to hire more people to track down those guilty of evading taxes, or of paying their employees under the table.

A tax investigator's salary costs the government around 70,000 euros a year, but Ondracek said they could each bring in 900,000 euros in lost tax revenue.

On the rise

A woman leans over a sink as she fills a bucket with soap and water

Housekeepers in Germany are often paid in cash

Dodging the tax man has become more acceptable in Germany, said IW's Karen Horn, adding that studies have shown that it is usually the employer and not the employee who is looking to avoid paying taxes.

According to Horn, one in five Germans perform under-the-table work at least 6.5 hours a week for around 10 euros an hour.

"The typical worker is male in his late 20s and earns less than 1,500 euros," explained Horn.

Creating more jobs

It is in the government's best interest to get more people to work aboveboard – especially in a recession, Horn said.

According to Horn, between 177,000 and 355,000 regular positions could be created if 30 to 60 percent of under-the-table work in private housholds were legalized, based on an average wage of eight euros per hour.

Author: Mark Mattox (ap/dpa)

Editor: Jennifer Abramsohn

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