It's payback time for Italy's artful dodgers

Tax on tax on tax? No wonder a new finance minister is attempting to reform the system, says Andrew Gumbel

People often laugh at Italy as a nation of tax dodgers, but perhaps that's not quite right. The really tricky stunt to pull is not evading taxes (although there is no lack of masters in that art) but, on the contrary, trying to pay them.

Anyone playing honest John with the Italian treasury is rapidly immersed in the kind of bureaucratic mayhem that once precipitated the fall of Byzantium. We're talking 300 different taxes on income alone, and a tax declaration form to make even the most dedicated accountant weep.

The Rome government has issued 2,900 laws, decrees and circulars on taxation since 1980 in a frenzied but largely unsuccessful attempt to plug the growing hole in the country's public finances. No stone has been left unturned in the hunt for extra public revenue: there is a special tax on fridges in butchers' shops, another on takeaway pizzas.

Italy is probably the only country in the world where taxpayers have to pay money to the government before they have filled out their tax returns, and, quite often, they have to shell out afterwards, too. Sometimes they are informed they have to pay a new tax, but aren't told when or to whom, with the result that thousands of people inadvertently find themselves branded as "outlaws" by the finance police.

For years, government ministers - bewildered by the mess, like everyone else - have preferred to ride with the system rather than undertake serious reform. Until last week, that is. Vincenzo Visco, the new Finance Minister, proved himself a brave man by announcing a "profound transformation" of the tax regime, to begin with the 1997 budget.

There would be no more than 10 taxes on income, he said. Moreover, a whole array of tax receipts, invoices, stamps and what he described as 19th-century paraphernalia will be swept away.

It will be a daunting task. The system has been flying by the seat of its pants for so long that it is riddled with anomalies, anachronisms and absurdities. It emerged recently that 5 million householders are still being charged a special tariff to drain the Pontine marshes south of Rome - an operation that was concluded by Mussolini in the 1930s.

According to an investigation conducted by La Repubblica, the state "borrows" money raised from car tax to top up its health service budget. Taxes supposed to pay for public housing projects end up helping to pay off the deficit. Money set aside for job retraining goes into social security instead.

As for indirect taxes, they seem designed to squeeze the consumer as far as possible. Household bills for gas or electricity include one kind of tax. This tax, along with the rest of the bill, is subject to VAT. Then, at the moment of payment, the bank or post office demands yet another tax. Paying tax on tax is universally frowned upon by fiscal experts: as for paying tax on tax on tax - well, it can only happen in Italy.

Behind all this is the deficit, running at more than 120 per cent of GDP, around twice the level stipulated by the Maastricht convergence criteria. For the past 20 years, Italy has been on an inexorable downward spiral. The bigger the public debt, the more taxes the state imposes; the more taxes the state imposes, the more people are tempted to evade them; the more people evade their taxes, the bigger the public debt grows.

Tax-paying Italians now give up around 50 per cent of their income to the treasury, the second-highest rate in the world after Belgium (which also has big deficit problems) and far ahead of the 33 per cent average in Britain.

That might be politically acceptable if Italy had first-rate public services, but it does not. What is more, many small businesses can now survive only if they conceal at least a part of their taxable earnings. Some parts of the country, especially the super-wealthy north-east, are on the verge of full-scale revolt. Already one group in Treviso, near Venice, has started organised disruption of the tax police's work.

Mr Visco's task is thus of the greatest delicacy. His proposals are not only brave; they may be the only way to save the whole system from collapse.

Suggested Topics
Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Luis Suarez looks towards the crowd during the 2-1 victory over England
Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

JavaScript Developer (Angular, Web Forms, HTML5, Ext JS,CSS3)

£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: JavaScript Dev...


£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

SAP Data Migration Consultant

competitive: Progressive Recruitment: My client, a FTSE 100 organisation are u...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice