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A Solution to Tax Evasion in Italy – The Energy Use Tax

Would an Energy Tax Benefit Italy?

Italian’s don’t like paying taxes and they are very good at finding ways around paying them too. As has been claimed before on BlogfromItaly.com, tax evasion is something of a national sport in Italy.

Here is a novel idea for an energy use tax which may help solve Italy’s perennial tax evasion problem. It’s quite fair too.

Italy’s national coffers suffer from this lack of tax income and in times of crisis such as this, Italy’s economy, which has been stagnant for a good few years is at risk of going the same way as the economies of countries like Greece and Ireland.

Speculation is growing that Italy could be the next Ireland even if Italy’s finance and economy minister is working to avoid this happening. Cuts are being introduced right, left, and centre and are so draconian that even Italy’s justice system seems to be at risk of paralysis. Some in Italy do not believe Italy’s government has a crisis-recovery strategy – if you can read Italian, see the comments on this article on Italy’s finance minister Tremonti’s opinion of the crisis which appeared yesterday on the site of Il Sole 24ORE.

So how can Italy raise some more cash? Well, I’ve been puzzling over the odd Italian tax evasion situation for a good while and recently a little light came on in my old head and I thought: How about an energy use tax? I’ll explain.

Everybody – Rich and Not So – Uses Energy

Would an Energy Tax Benefit Italy?
Would an Energy Tax Benefit Italy?

Everybody in Italy uses some form of energy, increasingly this energy is coming from solar power and other renewable energy sources, but the vast majority of Italians heat and light their homes with electricity and gas produced and supplied by traditional non-renewable methods. Logically, the bigger your home, the more energy you use. As a general rule, wealthier people tend to have the biggest homes, or even several homes, and each needs heat and light.

Gas and electricity meters exist in most if not all Italian homes so the electricity and gas suppliers know exactly how much energy each home consumes. While I could be wrong, I’m fairly certain Berlusconi‘s massive mansion in Arcore on the outskirts of Milan consumes much more energy than our little Milan apartment.

Energy Tax Scales

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It would be possible to introduce several scales for this tax, with each one reflecting a certain level of energy consumption. The greater the consumption, the higher the tax. And the icing on the cake is that this tax would be paid as part of the electricity and/or gas bills. If you don’t pay, you don’t have the energy to heat that large heated swimming pool – bye bye pool parties. This would make such a tax difficult to get out of paying.

Gas and electricity meters do not, generally, lie, which would make it harder, though not impossible, to dispute the figures. This being furbo Italy, I daresay some would be able to get at the energy companies and have their actual consumption levels reduced, but such people would be in a minority and where massive falls in consumption are noted, inspectors could be sent out to check that everything is as it should be.

Encouraging People to Reduce Energy Usage

Furthermore, people would be encouraged to keep their energy bills down and this would have a positive effect on the environment as it should reduce CO2 emissions and other greenhouse gases. Other counties might even be tempted to follow Italy’s lead. I have not checked so I do not know if such a tax exists elsewhere around the world.

Initially this would be a tax on property used for residential purposes. Later on, it could be extended, if needed, to industrial and commercial premises, or perhaps the tax should be implemented for commercial energy use at the same time.

Could an energy use tax be the answer to tax evasion in Italy? It would be relatively equitable and should not even be that difficult to implement seeing as the figures already exist. With some careful accounting, the income from this scheme should lead to a reduction in other taxes and this would contribute to a reduction in Italy’s tax burden which is one of the highest in Europe. Indeed, income tax levels should really be cut at the same time as the energy use tax is introduced to avoid ‘punishing’ those who do pay taxes in Italy.

What do you think? Is this a good idea or not? Opinions welcome.

Bulb Photograph by PiccoloNamek

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