New Italian 'Income Calculator' Being Studied

by Ulrika Lomas, Tax-News.com, Brussels

17 March 2010

A project for a radical update to the Italian Revenue Agency’s ‘income calculator’ (redditometro), so that it may more accurately compare a taxpayer’s spending capacity against declared taxable income, is being studied under the direction of its assessment director, Luigi Magistro.

It has previously been said that fresh thinking on measures to combat tax evasion was necessary as, for example, the present sectoral studies have proved to be of limited usefulness. The existing, and seldom used, ‘income calculator’ has few, and now largely obsolete, parameters.

Its reformulation, based on the congruity or incongruity between a taxpayer’s declared income and standard of living, is seen by many as the way forward. It is envisaged that it would be based upon statistical methods, but remain relatively simple to use.

It would not look only at the mere possession of goods or investments, but cover the real expenditure of a taxpayer – for example, not only the possession of a car, but its specific value by make and model.

It could 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.

It is hoped that the changed instrument will be available for utilization by the end of this year. It has already been agreed by interested parties, such as professional bodies, that a technical roundtable should be constituted as soon as the Revenue Agency has produced a first model around which to base a discussion.

That roundtable should then produce a prototype before the summer break, so that it can be tested, its procedures written and legislative regulations passed, during the second half of the year.

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