IMPROVING THE METHODOLOGY FOR ASSESSING THE SHADOW ECONOMY TO INCREASE LOCAL BUDGET REVENUES

This article develops an integrated methodology for measuring shadow economic activity that erodes local tax bases and weakens subnational fiscal autonomy. The proposed framework combines national-accounts adjustments, tax-gap analysis, labor-input discrepancies, cash-intensity indicators, digital transaction traces, taxpayer segmentation, and a regionally weighted composite shadow-exposure index using 2021-2025 information. The methodology improves policy usefulness by connecting estimated hidden activity with assignable local revenue potential, uncertainty intervals, sectoral risk maps, and measurable formalization priorities.