Thursday,
December 28, 2006
Italians Encouraged to Pay Taxes... Why?...How?
The
ANNOTICO Report
As I
get older and wiser, I am less critical and more appreciative of both the
Italians reluctance to wage war, and needing to
be convinced that it is Really Necessary, and should be used only as a last
resort, AND the Italians reluctance to pay Taxes, when they see the
Corporations not only engage in Tax Avoidance with Preferential Tax Breaks, and
the Subsidies the Corporations are awarded.
Additionally
they see the Tremendous WASTE in Government Spending and the Sloth of the
Bureaucracy, and say to themselves Why Pay ????
......... I thinking the same...... :)
The
essence of the article below is that where Berlusconi used Amnesties to get
more voluntary compliance, Prodi will use greater
Investigative and Prosecutorial methods.
Prodi Seeks to Make Italians
Pay Taxes, Not Pay for Forgiveness
Bloomberg News
By Sheyam Ghieth
December
27, 2006
In the first 11
months of 2006, income-tax revenue increased more than 9 percent to 33.8
billion euros (44.4 billion). The gains came as Prime Minister Romano Prodi committed more resources to chasing cheaters as part
of a pledge to end tax evasion in seven years.
Prodi's effort, which aims to
generate 8 billion euros in revenue next year in a country where an estimated
100 billion euros of taxes go unpaid each year, may determine whether Italy is
able to fend off fines for breaching the European Union deficit limit. It also
contrasts with the policy of former Prime Minister Silvio
Berlusconi, who raised revenue through tax amnesties -- forgiving evasion for a
fee.
``Eight billion
euros in such a short time may seem a little ambitious, but there is no doubt
that Prodi's government has taken a stance toward
evasion that is very different from the previous one,'' said Annamaria Grimaldi, an economist
at Banca Intesa SpA in Milan. ``Not passing amnesties and one-offs all the
time is already a step in the right direction.''
Cash Limits
Deputy Finance
Minister Vincenzo Visco estimates that as many as
half of Italians in some parts of the country dodge income taxes. He's leading
the collection effort with a 55-point plan that includes going after businesses
that don't give receipts, placing a 1,000-euro limit on cash transactions and even
forcing soccer clubs to reveal details of players' contracts to tax
authorities.
How much of that
increase came from the crackdown by a government that's only been in power
since May is difficult to quantify. The economy did expand an annualized 1.7
percent in the third quarter, after stalling last year. Still, taxpayers may be
thinking twice, said Francesco D'Amuri, a professor
at the University of Essex and author of the paper ``Workers' Tax Evasion in
Italy.''
``The fact that
the government is acting seriously against the problem will make the climate
less favorable for cheating on taxes,'' he said. ``Expectations play an
important role in the decision to conceal income from the authorities.''
Tax Dodges
Italians usually
dodge taxes by under-reporting income, hiring workers off the books and paying
for services without a receipt. Mechanics, plumbers and even retailers
routinely ask clients whether they need a receipt or prefer a lower price.
An undercover
journalist for an Italian television program bought 216 euros of perfume and
jewelry last month at a shop inside the Finance Ministry without a receipt. The
program prompted Visco's office to release a
statement admitting the episode showed just how common tax evasion was in
As many as 95
percent of taxpayers in Italy, the third- largest economy in the euro region, claim they earn less than 40,000 euros a year,
while only 1.6 percent of the population admits to earning more than 70,000
euros annually.
Debt Downgrades
The priority
given to fighting tax evasion as a way to raise revenue contributed to Standard
& Poor's and Fitch Ratings cutting their estimates of Italy's
creditworthiness on Oct. 19. The two agencies faulted Prodi
for not cutting spending enough to bring the deficit to less than 3 percent of
gross domestic product next year for the first time since 2002.
The same rating
companies had previously faulted Berlusconi for using tax amnesties to try to
control the deficit.
While
Berlusconi's two-time finance minister, Giulio Tremonti,
also pledged to combat evasion, he implemented a serious of amnesties on
everything from hiding money offshore to illegal construction. In 2003, the
peak year of the condoni --as they are known in
Italian -- the government brought in more than 20 billion euros, the equivalent
of 1.5 percent of GDP, from fees paid in return for a pardon or to avoid future
audits.
``It's admirable
that the government is suddenly trying to make people obey the law, but since
when does that actually work?'' said Paolo, a Roman taxi driver who refused to
give his real name because he hasn't paid taxes in ``many years.''
``Why should I
kill myself to pay taxes, if I know the guy next to me isn't going to pay
either? The law can't just target me.''
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