Italian resort reveals widespread tax evasion

AP Photo/Marco Trovati

One of Italy's most exclusive ski resorts, Cortina d'Ampezzo (pictured) has been subject to a raid as part of Mario Monti's new government crackdown to claw back undeclared revenue, according to a report in the Telegraph.

The inspection has laid bare incredible levels of tax evasion and highlights a nationwide problem of Italians hugely under-declaring their incomes.

Italian tax officials traced the owners of 133 Lamborghinis, Ferraris, SUVs and other top-end cars that they found parked in the snow-lined streets of Cortina d'Ampezzo, a luxurious resort frequented by the rich and famous.

Nearly a third of the car owners (42) had declared incomes of less than €22,000, while a further 16 claimed to be earning less than €50,000 a year. Italy's inland revenue agency said it would be almost impossible to run a top-of-the-range BMW or Porsche on such modest salaries, at a time when a full tank of petrol for a high-performance car can cost as much as 180 euros.

The checks came on 30 December - at the height of the ski season - when the population of the town swells from 7,000 to around 40,000.

Tax officials found evidence that hotels, restaurants, boutiques and beauty salons were also hugely under-declaring their takings. Dozens of businesses were apparently spooked by the attention of the tax inspectors, and admitted earnings that were up to four times as much as they had declared in the same period of the previous year.

In perhaps the most striking case in the town, which hosted the 1956 Winter Olympics, the owner of a luxury goods boutique could not produce a single tax receipt or document when asked by inspectors, despite their previous year's revenue amounting to 1.6 million euros. A suggestion that most, if not all of their income could be undeclared.

The 'super blitz' as it has been dubbed by the Italian press, caused indignation among locals and visitors in Cortina, who argued that the high-profile resort had been unfairly demonised, when the problem was widespread.

"Cortina is no different from the rest of the country," a local businessman, Guido Barilla, told the Corriere della Sera newspaper. "The situation is worse in other parts of Italy. It's not as though tax evaders are all concentrated here. Owners of luxury cars may not pay their taxes, but nor do millions of other Italians."
The new Italian Prime Minister Mario Monti, is using these crackdowns to force tax-evaders to pay up in an attempt to tackle Italy's 1.9 trillion euro national debt and balance the budget by next year.

It's no small task - a recent government study estimated that Italy's black economy (including evasion of income tax and VAT) amounts to 275 billion euros each year - 17.5 percent of the country's GDP.
Read Full Story