Italian Financial Advisors Propose New Way To Tackle Tax Evasion

by Ulrika Lomas, Tax-News.com, Brussels

12 January 2010

If the Italian government really wants to combat tax evasion, Claudio Siciliotti, president of the national council of Italian tax and financial advisors (commercialisti), has said that it requires a new method to identify taxpayers’ true income.

Tax evasion is said to put a heavy burden on those who regularly pay their taxes. The commercialisti have estimated that the per capita burden of Italian taxation has reached over 50%. They have calculated that, after stripping Italy’s gross domestic product of the estimated underground economy, the tax burden on Italian taxpayers increased from the official 2008 level of 42.8% to 50.6%.

That was said to be “unsustainable,” and was the direct result of the almost 20% of the economy, worth some EUR300bn (USD435bn), which fails to pay its taxes. Those unpaid taxes would reach EUR100bn per year.

The new tool, Claudio Siciliotti said, would need to be non-selective, but able to be utilized across all groups of Italians – those with jobs and those without, employees and sole traders, housewives and pensioners.

Fresh thinking is considered necessary as the present sectoral studies have proved to be of limited usefulness. A new instrument, based on the congruity or incongruity between a taxpayer’s declared income and standard of living, is seen by the commercialisti as much sounder than the present mecchanism of comparing a taxpayer’s declared income against a sector’s norm.

It would include a wider range of wealth indicators that would span not only property, cars and yachts, but also other indicators of a taxpayer’s standard of living, such as travel, club subscriptions, and private schooling.

The proposal by the commercialisti has already led to an informal meeting with the Italian Revenue Agency. They would now propose another meeting in order that the new mechanism could be adopted this year.

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