More Italian Tax Troubles

Like pizza and not showering, flagrant tax evasion is commonplace in Italy—a place where even former Prime Minister Silvio Berlusconi once claimed that dodging the tax man is a “natural right” and people smuggle their unreported ducats out of the country in their underpants. Lately, however, the financially beleaguered Italian government has finally begun cracking down on widespread tax evasion by using its state-run tax-collecting company, Equitalia, to bring in revenue from the so-called shadow economy that in 2007 was estimated by economists to make up 22.3 percent of the country’s GDP. Equitalia has faced severe criticism from the public, who deride it for going after average people instead of the private jet owners who report no earnings. Italy’s Informal Anarchist Federation was so fed up with Equitalia that they letter-bombed its Rome headquarters in December. Equitalia director Marco Cuccagna was hospitalized after the parcel attack, having lost part of his finger and damage to his eye. Equitalia’s Naples office was also attacked with explosives in both December and January; however, no one was injured in or claimed responsibility for either attack.

Dan Ariely, a leading behavioral economist and professor at Duke University, thinks Equitalia is ineffective. “When you make it clear that lots of people are cheating, that creates a new social norm for it. [Italy needs to] promote people who pay taxes instead of emphasizing deviants."

Illustration by Daniel David Freeman

@WilbertLCooper