That levels of tax evasion in Italy are laughably high is no secret. Mario Monti, Italy’s replacement for tax-evasion encouraging Prime Minister Silvio Berlusconi, is attempting to bring Italy’s army of tax evaders to heel.
One recently introduced, if not yet permanent, measure of the Monti-led Italian government means it is now impossible to pay more than €1000 in cash for anything in Italy.
There has been talk of introducing a wealth tax to plug the holes in Italy’s leaky public finances. The trouble is, identifying the wealthy in Italy is not going to be at all easy.
Italian newspaper, Il Sole 24 Ore published a few facts which have been duly regurgitated by other Italian newspapers and websites. These facts were rather startling.
For a start, 42.4% of the 42,000 luxury boats in Italy are owned by people who say they earn less than €20,000 a year! Something is amiss, is it not? Such poor wealthy individuals would neatly avoid a wealth tax if it were to be based solely on declared annual income.
Of course, if you have a flash boat, you need an impressive car to go with it.
Italy, apparently, has more than 200,000 owners of luxury cars made by the likes of Mercedes and BMW, yet these poor people only manage to earn between €20,000 and €50,000 a year. Or rather, they only declare such earnings to Italy’s tax man – the rest is obviously spent on the latest Merc and a €1,000,000 motor yacht. Perhaps these clever Italians are declaring what is left over after they have paid the insurance on their motors and the mooring costs on their big boats?
Italy’s tax man is starting to wise up to the furbo tricks of Italy’s poor wealthy and putting two and two together.
One day, maybe, curious stories such as the one about the Italian who declared an annual income of €500 but managed to run no less than five Ferraris may become a thing of the past.
The only slight worry is just what Italy’s fantastic politicians will do with all the money clamp downs on tax evasion may recoup. Italian governments are not exactly famed for their prudent management of Italy’s finances. Some, such as a chap called Craxi, have been suspected of keeping a little back for themselves – perhaps so they can buy a suitably impressive mother yacht.
A clamp down on tax evasion in Italy is highly likely to net a few politicians too, even if their “capture” may be kept from the pages of Italy’s press.
In the meantime, Italy will first have to identify its wealthy before it can even start to think about introducing a wealth tax.
Giocamo says
I was in Firenze at market in the piazza of San Spirito. I was enjoying the day and the fruit & nuts which I had just purchased from the vendor when the tax police arrived. There were 2, one older and his younger helper. The older tax man looked and strutted around like Mussolini. I watched for about 1/2 hour. I understand some Italian and was amazed at the goings on. The tax man in the end took the very nice watch from the vendor and asked for cash, when the vendor complained the tax man began to write out a ticket, the vendor complain but handed over a wad of cash. He walked away with his helper who had to carry the older mans bag etc. I followed them to see the older policeman take the money out and give the younger man his small cut. This is only one story I have around tax in my 11 trips to Italia. I love it!
kmb says
Interestingly, over recent weeks, we’ve noticed quite a few more instances when our purchases are rung up at the register at well below what we actually paid. This has happened at the Gelateria run by two older women and at the hair cutters. Whatever measures they may try to take, it may be hopeless.
Alex Roe says
Interesting, Kmb. Italians are past masters at working their quirky system. I suspect many smaller businesses decide how much they want to declare before telling the tax man. Sometimes you get receipts, sometimes not.
The only way round such tactics is to connect tills to the tax man and to monitor stock levels – not easy.
Bringing Italy to heel is always going to be a challenge unless there is a serious mentality change. I’d love to hear what the nations priests talk about in churches, but I doubt the words like honesty and expressions like civic responsibility are much used.
A couple of Italians, that I know of, have said Italians are impossible to govern – one was D’Alema and the other a certain Benito Mussolini, if my memory serves. While I might not agree with such an assessment, I would agree that governing Italy is a challenge.
Best,
Alex
Toma says
I have not one but two neighbors who both drive luxury cars (an Audi and a merc) yet they both work normal jobs, one of them is a magazziniere. They can do this because like so many Italians they own their homes through inheritance and have high disposable income.
Alex Roe says
Hi Toma,
Provided your neighbours are up to date with the tax people, no problem and they have nothing to fear either – but somebody is evading taxes in Italy and some of the sacrifices Monti is expecting have been brought about by people not paying their dues.
What some Italians are not overly happy about is having to pay too much tax simply because others are not paying up.
Best,
Alex