Business

Italy at war with tax evasion

It's an exaggeration to say all Italians have something to hide. But equally, it's safe to assume many of the 15 million who claimed a net income of zero last year, do live in fear of a knock on the door.
It's an exaggeration to say all Italians have something to hide. But equally, it's safe to assume many of the 15 million who claimed a net income of zero last year, do live in fear of a knock on the door. Kaiser Nelson

THE Italian government's new year push to curb the country's ruinous levels of tax evasion appears to have already divided opinion.

One strategy in the all-out war on tax cheats is to probe deeper into people's bank accounts with the authorities' new powerful computer system, Serpico.

It might, however, have been named "Big Brother" given some of the reactions it has already provoked. Popular comic and political activist Bepe Grillo on Monday week described the tax collection office Equitalia as the "terror of every Italian" and said he could understand why an anarchist group had that very day sent it a parcel bomb.

A few evenings earlier, an 80-strong squad of tax inspectors raided hotels and restaurants in Cortina to publicly put the frighteners on the chi-chi ski resort's high concentration of hard-up yacht owners, many of whom claim to earn less than AU$20,000 a year.

It's an exaggeration to say all Italians have something to hide. But equally, it's safe to assume many of the 15 million who claimed a net income of zero last year, do live in fear of a knock on the door.

Figures quoted for annual loss of tax revenues vary from AU$120 billion to $300 billion a year. Just before Christmas, La Repubblica newspaper quoted finance department data which suggest levels of tax evasion have leapt fivefold in the last three decades, with the treasury losing $275 billion in the last year alone.

With such vast sums at stake, getting Italians to cough up is central to new Premier Mario Monti's plan to slash debt and balance the national budget by 2013. Authorities have been turning up the heat on evaders in recent years. But with just $35 billion from tax cheats since 2008, there is a very long way to go.

Tax evasion has contributed to one of the world's largest public debts, which at $1.9 trillion has panicked the money markets - and threatened the survival of the euro. But conversely, Bank of Italy figures published in December showed that in terms of personal wealth, Italians are possibly the richest people in the world, highlighting the imbalance between Italy's vast personal wealth and the desperate state of the public purse.

The new government has already given revenue protection a high priority. In addition to scrutinising the accounts of people who claim low incomes and boosting cross referencing with other indicators of wealth, it will also ban cash transactions above $1206.50 and lower the threshold at which tax evasion becomes a criminal offence.

Many economists, such as Professor Francesco Gavazzi of Milan's Bocconi business school, think the government should also introduce tax relief on more goods and services to encourage customers to demand receipts from the self-employed and small businesses.

"Even tax relief as high as 30 per cent would leave the government in pocket," he said.

But there would still be the tens of thousands of small shops and restaurants whose goods or services are never going to qualify as tax deductible. The law states customers must take an official receipt out with them every time they pay in a bar or restaurant, and keep hold of it for 100 metres - or face a fine. This is meant to deter businesses from obscuring their earnings. But in a country where pavements are used as car parks with impunity, the chance of the arcane receipt law being routinely enforced are slim, and everyone knows it.

And then there's the problem of the vast sums hidden overseas. At the end of last year a couple from Venice were nabbed by the finance police after declaring only six euros of income in a decade. A 10-year audit performed on the alleged tax cheats found more than 300 million euros of undeclared wealth, much of which was tucked away in foreign accounts.

One banking association in the Italian-speaking canton of Switzerland estimates that the banks there are harbouring $130 billion of Italian assets, stashed out of reach of Rome's tax authorities.

The squirrelling away of private assets was graphically illustrated last month when a lorry carrying 13 tonnes of gold was stopped as it attempted to pass over the boarder to Switzerland.Previous governments have adopted a carrot and stick approach by threatening evaders and simultaneously offering amnesties in which offenders have been promised anonymity and low taxation rates of just 5 per cent on money they bring back from abroad."

Professor Franco Pavoncello of Rome's John Cabot University said ministers increasingly had the support of those who did pay their taxes.

"Attitudes are now changing; people are now saying; 'why should I be poor when this person who's not giving me a receipt isn't paying his taxes?'"

But ultimately, many pundits say a mixture of coercion and changing attitudes will not be enough either, to overcome human beings' natural aversion to being taxed - and for Italy to solve its revenue problem.

"Until the government lowers the burden of taxation there's always going to be the incentive to evade taxes; the overall tax rate here of 45 per cent is just too much," Professor Gavazzi said."The trouble is they will need to cut public spending to reduce it.

"No one said it was going to be easy.

Topics:  italy taxes tax evasion



Brisbane's arts and culture events centre stage

A CITY drenched in culture, Brisbane is again flaunting an arts and culture events calendar fit for a queen.

Homewares stores to fulfil your Instagram dreams

No Caption

You too can become an Insta-star with these fab stores.

Date nights under $50

Nothing is more romantic than a picnic with a cracking view.

NOT every date has to cost you a bomb.

Top 10 Brisbane experiences to cross off your bucket list

Do yourself a favour and get amongst the food truck scene. Eat Street is a great place to start.

A GOOD bucket list doesn’t have to span continents or cost millions.

Six mega sporting events you need to be at this year

Don't miss all the action trackside this season.

IF THERE is one thing Brisbane does damn well, it’s play host.

Insider’s guide to the best rooftop bars

Eleven Rooftop Bar is one to put on your hit list.

SEE the world from a different perspective...

Where to get your hands on the best wings

Try out these bad boys at Buffalo Bar.

IS THERE anything better than a wicked bowl of chicken wings? Nope.

WATCH: Amazing creature caught on camera at Agnes Water

Sarah Cassell took a video of this whale at Agnes Water.

Early season visitor for Agnes Water

A to Z of Woolworths Marvel Heroes Super Discs

Woolworths Marvel Heroes Super Discs are the latest craze in collectables.

What is Woolworths latest collectable craze about?

Local Partners

Book review: Mia Freedman's book meets her critics head on

IF AUSTRALIA does have a tall poppy syndrome, Mia Freedman has most certainly been a victim.

Model Bella Hadid's see-through dress shocks in Cannes

US model Bella Hadid attends the Cinema Against AIDS amfAR gala 2017 held at the Hotel du Cap, Eden Roc in Cap d'Antibes, France, 25 May 2017.

It’s like she’s become addicted to shock value.

No room for morbid fans

Chris Cornell.

Fans want to stay in the hotel room where Chris Cornell died

Star Wars' 1977 Stormtrooper head banger confesses

A Stormtrooper is responsible for the biggest blunder in a Star Wars movie. Picture: Supplied

Man in most famous blooper in Star Wars history breaks silence

Lyn's knock-out show gets her to next round on The Voice

ONWARDS AND UPWARDS: Lyn Bowtell is through to the battle rounds on The Voice.

'It was bitter sweet to win like that'

Report reveals progress on $319m airport upgrade

Aerials of the Sunshine Coast.Jetstar plane in front of the Susnhine Coast terminal, Sunshine Coast Airport.

Over two dozen government approvals needed for airport expansion

Lost dough leaves sour taste after company collapse

Kathleen and John Mahoney from Sugar and Spice Bakery were stung after the collapse of Cantro Pty Ltd and are still owed money.

Supermarket operator collapse leaves sour taste for bakery

Open for inspection homes May 25-31

Check out this weekend's homes open for inspection

How Toowoomba house prices compare in Australia

For sale sign in front of home.

Here's what $700,000 will buy you in Toowoomba, Brisbane and Sydney

One of Maryborough's most historic homes is still for sale

FULL OF HISTORY: Trisha Moulds is owner of the historic Tinana state known as Rosehill. The beautiful home is currently for sale.

It has been the scene of both joy and tragedies over the years.

Ready to SELL your property?

Post Your Ad Here!