War on tax evasion squeezes crisis-hit Italians

Tempers are fraying at Italy's tax offices, as higher bills and a government clamp-down on evaders has driven recession-hit Italians to vent their anger on the country's most hated institution. "There's no end to it. Each day the noose tightens around our necks, and the more they tighten the screws, the less we can pay," one young businessman Gianbattista Tagliani told AFP. "The government wants to recover taxes too quickly." Tagliani, who owns a media monitoring firm, has come to one of the Equitalia tax collection counters in Rome to pay 5,000 euros ($6,250) in overdue social security contributions. The irony, he says, is that the State is one of his clients -- and it currently owes him 20,000 euros. But as it always pays him up to six months late for his services, he has had to find the 5,000 he owes them elsewhere. "On the other hand, celebrities like (motorcycle racer champion) Valentino Rossi say: 'Okay, I'll pay up now, if you give me for example a 30-percent discount'," he said. His comments echoed a strong sense of injustice against the privileged few, in a country that entered a recession at the end of 2011. Prime Minister Mario Monti, who took over from media mogul Silvio Berlusconi at the end of last year when the eurozone debt crisis hit Italy, has re-imposed a tax on principal residences his predecessor threw out in 2008. Berlusconi's move to cut the tax helped win him the elections that year. In a move to woo Italy's disaffected, Berlusconi seized on the highly unpopular tax to voice anger over Monti's "Save Italy" cuts and levies. "We can no longer freely spend our money and home owners rights are abused," he said at a recent rally. The capital gains tax comes on top of a hike in Value Added Tax (VAT) to 21 percent, which could soon rise further to 23 percent. But the strain on ordinary Italians has sparked a series of attacks on the tax agency. A parcel bomb, which exploded in an Equitalia office and wounded a director last December, set off a chain of attacks on taxmen and offices across Italy. There is also resentment over benefits enjoyed by privileged politicians, accused of living the good life while the rest of the country pays its dues. "Politicians, the government, they are not paying the penalty," said 49-year-old businessman Paolo Schiaramazza, who runs a building company. "They have official cars, they don't pay for their petrol, they eat and have fun for free, they are dressed finely and wear ties," he added. This was not only unjust -- "an agency of loan sharks", he called the tax office -- it is also pitifully inefficient. Equitalia defends itself, saying it only keeps nine percent of the tax revenue it collects. The rest goes where it belongs: into the government's coffers, to Italy's social security system, or to town mayors for example. "We send around 16 million letters chasing tax each year," said Equitalia's chief spokesman, Giovanni Lombardo. "That's an enormous amount, it tells us lots about the pathological relationship Italians have with the tax man." As the government set about trying to reduce Italy's vast debt, Monti waged war on tax evasion, estimated to be worth around 120 billion euros a year. Officers launched raids on wealthy towns luxury resorts such as Capri Island, forcing shops and bars to balance their books and issue correct receipts. Financial police are also exposing tax cheats thanks to a super computer system, Serpico. It probes bank accounts and flags up dentists or plumbers who own luxury villas, yachts and cars while declaring less than 20,000 euros a year. But the flood of dreaded Equitalia letters landing on doormats up and down the country has sparked a wave of suicides among indebted businessmen or unemployed workers, further fuelling public loathing of the tax agency. "The unhappiness of those who cannot pay has been added to that of those who don't want to pay," Lombardo admitted. So the agency has tried to make concessions. Where it would previously have seized a house or car for an unpaid debt of as little as 1,000 euros, it now often gives the owner a reprieve, or another six months to find the money. And in general, Lombardo says "there's been a real cultural change" in how Italians view tax evasion. "The fraudster is no longer seen as a crafty fox, but as someone who is harming everyone," he said.