QuoteItalian ski resort lays bare tax evasion
A raid on Cortina d'Ampezzo, one of Italy's most exclusive ski resorts, has laid bare the startling levels of tax evasion as the new government of Mario Monti attempts to claw back billions in undeclared revenue.
Dolomites ski resort lays bare Italian tax evasion
By Nick Squires, Rome
Tax officials traced the owners of 133 Lamborghinis, Ferraris, SUVs and other top-end cars that they found parked in the snow-lined streets of Cortina d'Ampezzo, a winter playground for the rich and famous in the Dolomites.
They found that 42 of the owners – nearly a third – had declared incomes of less than 22,000 euros (£18,000) a year. A further 16 claimed to be earning less than 50,000 euros a year.
The investigation, in Italy's answer to St Moritz, highlights a nationwide problem of Italians cheating the tax man by hugely under-declaring their incomes or declaring no income at all.
The spot checks were carried out by a team of 80 officers from Italy's inland revenue agency, who said it would be almost impossible to run a top-of-the-range BMW or Porsche on such modest salaries, at a time when a full tank of petrol for a high-performance car can cost 180 euros.
Another 118 sports cars were found to be owned by companies, rather than individuals, for the purposes of tax write-offs.
But of those companies, 19 declared losses for the tax year 2009-2010, while 37 claimed to have made profits of 50,000 euros or less.
While Cortina's luxury chalets, designer boutiques and stunning natural setting have long made it popular with celebrities and the mega-rich, the "super blitz", as it was dubbed by the Italian media, sent a chill through its Italian clientele.
The checks came at the height of the ski season, when the population of the town, which hosted the 1956 Winter Olympics, swells from 7,000 to around 40,000.
Tax officials found evidence that hotels, restaurants, boutiques and beauty salons were also hugely under-declaring their takings.
When the town was targeted in the Dec 30 crackdown, dozens of businesses, apparently spooked by the attention of the tax inspectors, admitted earnings that were up to four times what they had declared in the same period last year.
In perhaps the most striking case, inspectors found that the owner of a luxury goods boutique, whose revenue last year amounted to 1.6 million euros, could not produce a single tax receipt or document, suggesting that most if not all of his income went undeclared.
Mario Monti, a former European Commissioner who became prime minister after Silvio Berlusconi resigned in November, is attempting to tackle Italy's 1.9 trillion euro national debt and balance the budget by next year, in part by trying to force Italians to pay their taxes.
But he faces a Herculean task – a recent government study estimated that Italy's black economy, which includes evasion of income tax and VAT, amounts to 275 billion euros a year, or 17.5 per cent of GDP.
In a country where restaurants continue to do a brisk trade and smart new cars ply the motorways, only 72,000 Italians last year declared a gross annual income of more than 200,000 euros – representing just 0.17 per cent of all tax payers.
Economists have calculated that had Italy collected taxes as rigorously as Britain and the US in the last 40 years, the country's national debt would now be 80 per cent of GDP rather than 120 per cent.
The raids caused indignation among locals and visitors in Cortina, who said that the high-profile resort had been unfairly demonised as a nest of rich tax evaders, when the problem was widespread.
"Cortina is no different from the rest of the country," a local businessman, Guido Barilla, told Corriere della Sera newspaper. "The situation is worse in other parts of Italy. It's not as though tax evaders are all concentrated here. Owners of luxury cars may not pay their taxes, but nor do millions of other Italians."
"I don't want to defend tax evaders, but the crackdown should be extended to the whole country, not just Cortina," said Antonio Costato, an executive and a member of Confindustria, the Italian employers' association.
Former members of Mr Berlusconi's conservative coalition, which was perceived as being soft on tax evasion, criticised the operation as a "media stunt" motivated by envy of the rich.
You have to admire how blatant Berlusconi's supporters with things like that last statement :mellow:
Hopefully the noose will tighten around Silvio as well.
Several of those cars were Silvio's. His are owned by front companies of course.
Quote from: Razgovory on January 05, 2012, 07:03:14 PM
Hopefully the noose will tighten around Silvio as well.
Slivio remains my hero. Bunga Bunga.
I give him credit. He's crooked even by Italian standards.
Sorry, what was this about? I lost track for about 10 minutes after I read "Italian ski resort" and "bare" in the same sentence.
Good. Should have done this years back, alas for not realising until the horse has bolted...
So they found that Signori 22,000 Euros owns a Ferrari. What next?
Quote from: Admiral Yi on January 05, 2012, 07:57:29 PM
So they found that Signori 22,000 Euros owns a Ferrari. What next?
They spend six million euros dragging them through the convoluted legal system as Signori 22,000 Euros and all his compatriots spend 10k euros each bribing their way out of it. In the end, the state nets a loss.
Quote from: Admiral Yi on January 05, 2012, 07:57:29 PM
So they found that Signori 22,000 Euros owns a Ferrari. What next?
What do you mean?
We really live in different worlds from these guys. I mean, tax evasion happens everywhere, and Hong Kong is no exception. But I can't imagine anyone, least of all politicians, publicly defending tax evasion.
This story brightened my day. Thanks Shaun. :)
Quote from: Ideologue on January 05, 2012, 11:39:43 PM
This story brightened my day. Thanks Shaun. :)
Well not mine. Not Cortina. :cry:
Can't be that exclusive if they always give me a warm welcome :P
An interesting statistic I came across, some years ago, in The Economist..........according to Italian tax records the average Italian shoe shop sell two pairs of shoes a year :hmm:
Quote from: Richard Hakluyt on January 06, 2012, 03:19:15 AM
An interesting statistic I came across, some years ago, in The Economist..........according to Italian tax records the average Italian shoe shop sell two pairs of shoes a year :hmm:
I've watched a long running shoe shop documentary, and it seems credible.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fguyism.com%2Fwp-content%2Fuploads%2F2011%2F07%2FAl-Bundy-Shoes.png&hash=9736c298481b21b5ec0d5942863a1ee244219cec)
Quote from: Sheilbh on January 05, 2012, 08:22:10 PM
What do you mean?
The ostensible purpose of this raid was to eventually increase tax collection. What's the next step on the path from point A to point B?
I would think conspicuous consumption works as a flag to focus investigative resources, but that they still need evidence of income to prove tax evasion.
Quote from: Admiral Yi on January 06, 2012, 07:24:41 AMThe ostensible purpose of this raid was to eventually increase tax collection. What's the next step on the path from point A to point B?
I would think conspicuous consumption works as a flag to focus investigative resources, but that they still need evidence of income to prove tax evasion.
I don't know. I've no idea about Italian law. I'd guess it's much like anywhere else and there'll now be tax investigations, audits, probably some deals and some prosecutions.
More important though is trying to change the culture. It needs to become clear that tax evasion won't be tolerated and may well be discovered - hopefully the effect on businesses in Cortina can be replicated in individuals and across Italy. That's the benefit of these targetted high-publicity swoops is that they get on the news. If you had all of these investigations spread all over Italy it may have the same immediate effect but it wouldn't get on the evening news, there'd be no stories about the government cracking down on tax evaders. Because of that there's less chance people would decide to voluntarily report just in case.
I suspect this is the first of several steps to make the 'rich' pay. Monti's first steps of austerity such as freezing pension indexation were perceived as falling rather heavily on the poor and the middle class. It's important for governments to give the sense that, as Cameron used to say, 'we're all in this together'.
Quote from: MadImmortalMan on January 05, 2012, 08:00:25 PM
Quote from: Admiral Yi on January 05, 2012, 07:57:29 PM
So they found that Signori 22,000 Euros owns a Ferrari. What next?
They spend six million euros dragging them through the convoluted legal system as Signori 22,000 Euros and all his compatriots spend 10k euros each bribing their way out of it. In the end, the state nets a loss.
If it works like over here they won't need to bribe anyone.
I've got a couple friends at our IRS. They tell me it is quite easy to find evidence of tax evasion (about 200k € average each case). The problem comes when the government tries to get that money back. The culprit is insolvent, assets are in someone else's names, etc. In the end the money is rendered unreachable by any kind of loophole imaginable.