Noting that the tightened measures to fight shadow economy are producing results, Dragonja assessed them as being above the expectations.

The outgoing minister told the press that out of an additional EUR 266m in VAT collected since 1 July, only EUR 170m can be attributed to the higher rate, while the remaining EUR 96m is related to taxpayers improving their payment discipline.

According to him, a decline in consumption in the period was negligent, standing at around 1%.

VAT collected from a total of 24 selected activities in the first quarter of 2014 was up by 31.5% compared to the same period last year, Dragonja said, pointing to an improvement in retail, maintenance and repair of motor vehicles and bars and restaurants.

While noting that the introduction of registers with special software that makes it impossible to delete invoices also contributed to the curbing of grey economy, he said that the government is not considering introducing certified cash registers.

Dragonja however announced a series of additional measures aimed at better control of cash transactions in commerce and efficiency of collection of taxes.

Announcing the entry into force of the new act on the prevention of undeclared employment and work on 18 August, Labour Minister Anja Kopač Mrak expressed hope that the higher penalties, going up from EUR 208 to between EUR 1,000 and EUR 7,000, will act as a deterrent.

Chief labour inspector Andrejka Grlič added that a change of mindset is also needed. "We are for the 'carrot and stick' approach, but I hope that the stick will not be needed and that the higher fines will make people start respecting the regulations."