Home > Uncategorized > Amid crisis, Italy confronts a culture of tax evasion – The Washington Post

Amid crisis, Italy confronts a culture of tax evasion – The Washington Post

October 20, 2012 Leave a comment Go to comments

Yet in Italy, as a saying goes, “only fools pay,” and fools in some professions are few and far between. Jewelers, restaurateurs and real estate agents all declare an average taxable income of less than $18,500 a year — lower even than mechanics, who at least admit to earning roughly $30,000 a year.

If official tax returns are believed, this nation of 60 million with some of the most expensive urban real estate in the world is home to only 394,000 people earning more than $135,000 a year. Newspapers in Rome and Milan are rife with stories of “evasione totale ” — or entrepreneurs caught tooling around in Ferraris and Porsches despite declaring almost no income. Berlusconi himself managed to fend off at least two allegations of false accounting by forcing a law through Parliament that decriminalized falsification of company accounting books.

“Here’s the real problem with Italy: You have people with villas and back yards the size of a park still declaring 15,000 euros a year,” or about $20,000, said Sen. Enrico Morando, a member of a key parliamentary budget committee.

Keeping the change

There is reason, however, for hope. The world’s largest economies, prompted by the U.S. financial crisis, agreed in 2009 to take a zero-tolerance line on tax evasion. Since then, the Italian revenue service has managed to recover $13.6 billion in evaded cash, more than any other nation in Europe. It happened as the Italians pushed through strong new laws, including one that legally declared cash discovered in tax havens to be the spoils of evasion, putting the burden of proof on suspected tax cheats to show otherwise.

Italy’s 63,000 tax police have also stepped up investigations, backed by tougher penalties including mandatory jail time for the biggest cheats. But the recent crusade has provoked a fervor in an anti-tax nation notoriously distrusting of government. A handful of Sardinian shepherds, for instance, are on a hunger strike in opposition to official attempts to collect back taxes, while the imposing revenue service building in Rome has become an increasingly popular protest site.

Nevertheless, Italy is poised to go further. Lawmakers are under pressure to approve a law that would fight evasion by bringing Italy closer to becoming a “cashless society.” All transactions above a certain amount — some are calling for a threshold as low as 100 euros, or roughly $135 — would be required to be made by credit card, debit card, check, electronic transfer or other traceable means.

But not everyone here is optimistic about speedy change. After Corinaldesi, for instance, called the police on the produce vendor who refused to give her a receipt, she discovered that a law on the books still gives him an out for having a broken cash register — despite the fact that it’s been broken for a very long time.

“The country needs to change, but I’m not yet sure it will,” she said.

via Amid crisis, Italy confronts a culture of tax evasion – The Washington Post.

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