New Italian Tax System: Police State Tactics?

New Italian Tax System: Police State Tactics?
2013 01 22

By Alan Johnston | BBCNews

The Italian authorities have been accused of resorting to police state-style tactics with the introduction of a new weapon to hunt down the nation’s many tax dodgers.

The new procedure makes it possible to scrutinise any family’s spending pattern, and compare this with what it says it earns.

Tax evasion in Italy has been a chronic problem for generations.

The authorities say the equivalent of nearly 120bn euros (£100bn, $160bn) worth of revenue is lost every year.

If you fail the Redditometro, you may get a visit from these guys, the Italian tax police.

And the nation’s army of tax inspectors desperately needs more firepower.

But some commentators have been outraged by this month’s launch of what is called the Redditometro - the Income Meter.

It has been described as unacceptably intrusive, the sort of thing that East Germany’s secret police might have dreamt up.

How it will work

The Italian tax inspectors have always had a lot of useful information to help verify income tax returns.

They have had data relating to major items of expenditure, like home and car ownership, and so on.

But the Redditometro will now help the authorities get a better fix on people’s likely spending habits in many other areas of daily life.

First, the system has divided the entire population into 11 classic, household types; couples, singles, families with children, etc.

Then it has built up very detailed models that show how each category is likely to spend its income.

The average probable outlay across 100 different areas of expenditure has been examined; food, drink, clothing, leisure pursuits, etc.

Then these predictions have been further refined by taking into account regional variations.

So the tax authorities believe that they will have a very good idea what sum, for example, the average family of four in southern Italy will be required to spend to get by.

Then, if such a family’s tax return suggests its income is substantially lower than that sum the authorities might get suspicious.

The family will have fallen outside its expected spending pattern model, and an investigation might be triggered.

The family might be asked, "How could you have so little income, and yet be spending the kind of money that we know a family like yours, in your part of Italy, must be spending every day?"

The family may then have to explain more about where its money is coming from, and how exactly it is being spent.

Porn magazine

The newspapers have been full of talk of how you might actually find yourself discussing your breakfast and lunch arrangements with the tax collectors.

And in the view of the Corriere della Sera newspaper columnist, Piero Ostellino, this is all too much.

"This is not fighting tax evasion, this is investigating how you live, what you buy, what you wear," he said.

"I’m against the Redditometro not because I’m in favour of evading taxes. I don’t think tax collection should be done by trampling on individual liberties."

Mr Ostellino argued that how he or any other Italian chose to spend their money was not the state’s business.

"I would like to live in a country where a cardinal can every month buy a pornographic magazine without having to explain this to the tax authorities!" he said.

"This is like the former East Germany!"

[...]

Read the full article at: bbc.co.uk

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