ITALY:In Italy, the taxman cometh . . . to ski resorts to see how people are spending their money, writes PADDY AGNEW
MANY YEARS AGO, while shopping in Venice one weekend, we learned an important lesson about modern living in Italy. My wife had just bought some items from a small artisan jeweler when we were stopped by the Guardia di Finanza (or finance police) as we came out of the shop. Could we see your fiscal receipts, please? We did not have them because, whilst the shop had given us a receipt, it was not a bona fide, tax declarable one. Fortunately, we had our credit card receipt and given that we were foreigners, the Finance police let us go on our way. Otherwise, we would have been liable for a fine because under legislation that remained on the statute book until 2003, anyone who could not produce a proper scontrino (fiscal receipt) or ricevuta fiscale might be fined anything from €50 to €1,000.
Our jeweller was not so fortunate since all the signs suggested that he was heading for a hefty fine. Having been in Italy long enough to understand just how many bureaucratic and fiscal hurdles are put in the path of anyone trying to do business honestly (particularly in a world heritage site like Venice), we felt very sorry for our artisan and his small business.
The incident also highlighted the strange role of the Guardia di Finanza. In theory, these guys are policemen. In practice, they are tax inspectors in military uniform, directly controlled by the finance ministry. While the Guardia di Finanza is often called on to carry out normal policing duties, its major responsibilities concern “fiscal policing”.
In other words, this corps deals with financial crime, ranging from money laundering and drug trafficking to cybercrime, credit card fraud and right down to the “non-emission” of the scontrino. In our village, when the loathed Fiamme Gialle (or “yellow flame” as the finance police are known) come to town, word soon goes out and all of sudden, shopkeepers start ringing in their proper, fiscal receipts.
For one of the realities of modern Italy is that finding ways to avoid tax is about as prevalent as preparing a plate of pasta. Not just plumbers, electricians and other manual workers but also white-collar professionals such as dentists and private doctors take it for granted that many people will prefer to pay “in nero” (in cash and thus not liable to VAT). The most respectable dentist may ask you which way you want to pay, with or without VAT, with the former tariff costing 20-25 per cent more.
So-called fiscal fraud abounds. Sometimes it suits the consumer – as in those restaurants where no bill is presented and only cash rather than receipts change hands. Sometimes, the sympathetic consumer will help a retailer such as the trusted hairdresser by paying the full whack but willingly accepting a receipt for a much smaller amount.
In a society in which public services often seem wasteful (even the health ministry estimates that the Italian health service “wastes” an annual €13 billion), many see nothing wrong in such small-time evasion – in fact, with organised crime remaining a huge problem (the Italian retailers’ confederation, Confesercenti, claims that with an annual turnover of €130 billion, Italy’s various mafias account for 6 per cent of GDP), people wonder just how much of their taxes end up in mafia pockets, via falsified public contracts.
There are, of course, the “cute hoors” such as the Venice couple who recently “forgot” to declare a €65 million sale of property. Clearly, tax evasion in Italy is not just small-time, with most economists estimating that private and corporate evasion costs Italy an annual €130 billion. The fight against tax evasion, at all levels, has become one of the major concerns of the current, so-called “government of technicians” led by former European Commissioner, Mario Monti.
To make the point, the Guardia di Finanza and the tax revenue collection service, Equitalia, have staged a series of much-publicised “blitzes” in places such as the exclusive ski resorts of Cortina D’Ampezzo and Courmayeur, as well as downtown Rome, Milan and Naples. The first of these “raids”, in the Dolomite resort of Cortina D’Ampezzo on December 30th produced some controversial, if hardly surprising, results.
For a start, the inspectors found that, mirabile dictu, many of the 36 retail outlets examined declared a 300 per cent increase on the same day in 2010, while several restaurants declared a 400 per cent increase. Obviously, the "word" had got out: the Fiamme Gialleare in town so start ringing in your receipts.
Likewise, the inspectors checked out the owners of 133 luxury cars of the Ferrari, Maserati and Lamborghini variety. Here they discovered that 43 of the cars belonged to people who declared an annual income of €30,000, when many of the cars in question weigh in with a purchase price of between €150,000 and €200,000. Then there was the strange case of the Cortina retailer who had goods worth €1.6 million on the premises – but nary a fiscal document in sight.
The mayor of Cortina, Andrea Franceschi, protested about the blitz, arguing that it was a “Hollywood spectacle” intended to justify all those price hikes, including more expensive petrol and a new property tax, introduced by the Monti government.
In truth, the mayor doubtless felt that the blitz was hardly good for business, VIP or otherwise. However, despite the reservations of some, the Monti fight against tax evasion is scheduled to step up a gear with inspectors now empowered to control private bank accounts, monitoring, above all, the movement of large sums of money. To further make the point, the prime minister has obliged his entire cabinet to publish full details of their income tax declarations of last year. Fiscal glasnost has arrived, but will it catch on?
