The Conte Government takes steps to force Italy’s “underground economy” to surface.

If we are to believe the Conte Government, they would much rather find and milk tax evaders and the “rich” responsible for hiding an estimated 130 to 200 Billion Euros per annum from the Taxman. Not to worry says the Italian IRS, if you G-men are unable to find and collect from tax evaders and the “rich,” not to worry, we can still continue to offset Italy’s mammoth National Debt by bleeding the millions of “small fry” salaried workers in government and private sector jobs. There is no way those guys can hide their income and avoid direct or indirect taxation, which in this “workers’ paradise” comes to about 70% of a workers gross salary.

The “rich” get stuck with indirect taxes (mostly VAT) levied here on everything from soup to nuts from 4% or 10% for food and other necessities to a top rate of 22% on just about everything else. Oh yes, like in “real” market economies, professionals can offset the VAT paid the Taxman with the VAT spent on purchases of capital goods directly related to their profession.

The average citizen naturally gets hit with most of the taxes that keep Italy afloat. Why is it so hard for the Taxman to zero in on tax evaders? Why is it so difficult for the Authorities to find the rich and tax them accordingly? Well, for one thing, in Italy you are considered “rich” or at least well off, if you gross € 50,000.00 or more per annum. Average net income based on annual income tax statements is in the neighborhood of about € 36,000 per year. So in a way the “rich” are already being taxed, right?

For years Mercedes Benz has sold more cars in Italy than in any other country in the world, including Germany. Mega Yachts and other luxury goods are a favorite of well-to-do Italians. Still the Taxman comes up empty-handed. Why? A good question for Conte and friends.

Plans are in the making to discourage Italy’s love of cash  transactions that are difficult if not impossible to trace. Despite the rise in e-commerce and the use of credit cards, only a small fraction of money transactions are made electronically.

In efforts to get the Country’s “underground economy” to surface, Conte & Co. seem intent on encouraging Italians to switch to electronic payment of their daily transactions foregoing the use of cash. To do so the Government plans to give whoever pays electronically a 2% tax credit. At the same time the use of cash will be discouraged by ordering banks to apply a 2% surcharge on ATM cash withdrawals exceeding 1500 Euro per month.

Why someone unknown to the Italian IRS would be encouraged to surface and become forever after subject to Italy’s exorbitantly high taxes in order to benefit from the above modest incentives escapes me.

One thought on “The Conte Government takes steps to force Italy’s “underground economy” to surface.

  1. We both know that Italy’s tax system is a joke at best. The little guy always pays and EVERY business is a tax evader despite the IRS on wheels (Guardia di Financa). Yet I am told if I don’t keep my bar receipt for a glass of wine these same folks will bust me on the street. 🙄

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