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Tax raid in luxury Italian resort delights most Italians PDF Print E-mail
Jan 06, 2012 at 01:48 PM

And about time, too!

On December 30, 80 tax inspectors descended on the luxurious winter resort of Cortina D'Ampezzo in the Italian Alps and brought about a Christmas wonder. Cafes, restaurants and stores selling luxury goods that a year earlier (and two years earlier as well) had done vey little business, suddenly saw their daily earnings increase by from 300 to 400 percent. "Miracolo!", a miracle, the newspapers trumpeted. Actually, there was a more terrestrial explanation for the sharply increased revenues: The arrival in town of the inspectors clearly led all these businesses to ring up all sales on their cash registers instead of unobtrusively slipping bank notes into the cash drawer.

And that was not all. The inspectors also were able to corroborate another Italian miracle, and that is that a large number of "poor", i.e. apparently not wealthy Italians are somehow able to afford luxury automobiles the gas tanks of which cost an average of 180 euros (more than $200) to fill. I'm not sure exactly how they were operating, but the inspectors were able to ascertain that there were 251 such cars registered to people or companies in Cortina. Of the 133 registered to private individuals, 42 belonged to people who in both 2009 and 2010 had declared a gross monthly income of €1800 (about $ 2302) and another 16 to people whose annual declared gross income was €50,000 ($64,000).

Of the 118 cars in town registered not to individuals but to companies (many of which, you should know, are on-paper-only "businesses" that have been set up precisely to save money on taxes), 19 belonged to "companies" which ran a loss in the last two years and another 37 to concerns with declared profits of under €50,000. If the proportions are the same on a country-wide basis - there are reportedly 200,000 super luxury cars in Italy - there is only one thing to be said and that is "Oh my". Of course, we cannot really be surprised by all this (see my December 20 piece on tax evasion) in a country where only 0.17% of taxpayers declare incomes over €200,000 and 50% of taxpayers claim to earn less than €15,000. But for many it appears to have really hit home.

Of course, not everyone is pleased by the new-found aggressiveness of the Italian IRS (there have been several bomb attacks on offices of Equitalia, the tax collection agency). Some in Cortina said the town was being "criminalized", others said that the tax evaders were a minority. But this is unlikely. It ain't, as I've said before, a national sport, but it is a generalized phenomenon in a country where the concept of citizenship is not a widespread one and where the government has all too long turned a blind eye.

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