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5 maltatoday | SUNDAY • 17 MAY 2020 NEWS The water services corporation is providing farmers with high quality polished reclaimed New Water which preserves Malta's aquifer. Treated sewage is being turned into very high-quality second-class water and through some 70 km of dedicated pipes being laid across the Maltese Islands, many farmers are now benefitting from higher yields and longer-lasting crops by using New Water. Visit our website to learn how you can apply for New Water and locate all the distribution points. wsc.com New Water for Malta and Gozo Europe Investing in Rural Areas OperaŸonal Programme II - European Structural and Investment Funds 2014-2020 "InvesŸng in human capital to create more opportuniŸes and promote the well-being of society" Project part-financed by the European Social Fund Co-financing rate: 80% European Union; 20% NaŸonal Funds Ultra Filtration Reverse Osmosis Advanced Oxidation user card GIVING FARMERS HIGH QUALITY SUSTAINABLE NEW WATER 70 KM OF NETWORK KURT SANSONE MALTA'S underground econo- my appears to have stabilised at an average below 21% of over- all economic activity in recent years, a Central Bank of Malta study shows. The figure is close to levels measured in Baltic countries and somewhat lower than other Southern European countries. The study, An Analysis of the Shadow Economy in Malta, was carried out by Tiziana Marie Gauci and Noel Rapa, research economists at the Central Bank. They used two methods based on differing variables to estimate the size of the shadow economy and although results are differ- ent, both suggest it has remained relatively stable over the past 10 years. The study defines the shadow economy as activities that are productive and legal but delib- erately concealed from public authorities to avoid paying taxes and meeting regulatory stand- ards. This excludes illegal activi- ties such as drug trafficking. The authors warn that given the hidden nature of the under- ground economy, estimates are surrounded by a considerable degree of uncertainty. One model that tries to esti- mate the amount of excessive cash in the economy, shows how the size of the shadow economy increased from 9.6% of GDP in 2000 to 21% of GDP in 2015. Since 2015, the underground economy shrunk to 20.4% last year. The other mod- el that takes into account employ- ment factors and the tax burden, estimates the average size of the shadow economy between 2000 and 2004 at 25.2%, going down to an average of 20% of GDP between 2015 and 2019. Despite the differences, the two models indicate that the size of the shadow economy has sta- bilised over the past decade. Underground activity impacts government revenue, puts pres- sure on legitimate businesses by way of labour resources, creates unfair competition and distorts indicators that are used to influ- ence public policy decisions. However, studies have also shown that ben- efits can be derived from the shadow economy because it creates extra added val- ue that will be spent in the official econ- omy. It can also act as employer of the last resort in times of turmoil and recession. Shadow economy is 21% of GDP