Author(s): Phoebe Saibalinh
The shadow economy poses significant challenges to governments and economies worldwide. To effectively tackle this issue, several strategies can be employed. Governments need to enact comprehensive legislation that explicitly addresses the activities of the shadow economy. This includes implementing stringent penalties for tax evasion, money laundering, and other related offenses. By imposing substantial fines and sanctions, potential offenders can be deterred from engaging in informal transactions. Additionally, efficient law enforcement and prosecution are essential to combat the shadow economy. Governments should allocate resources and provide training to law enforcement agencies, enabling them to effectively investigate and prosecute individuals involved in informal transactions. Close coordination and cooperation between different agencies, such as tax authorities, police, and anti-corruption bodies, can enhance the efficiency and effectiveness of enforcement efforts. Collaborating with international partners is another crucial aspect of combating the shadow economy. Cross-border informal transactions often involve multiple jurisdictions, making it necessary for governments to cooperate with other countries to track and apprehend offenders. Sharing intelligence, harmonizing legal frameworks, and conducting joint operations can significantly enhance the effectiveness of combating the shadow economy.