Italian ski resort raid lays bare rampant tax evasion
A RAID on Cortina d'Ampezzo, one of Italy's most exclusive ski resorts, has laid bare the startling levels of tax evasion as the new government of Mario Monti attempts to claw back billions in undeclared revenue.
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 winter playground for the rich and famous in the Dolomites.
They found that 42 of the owners – nearly a third – had declared incomes of less than €22,000 a year. A further 16 claimed to be earning less than €50,000 a year.
The investigation, in Italy's answer to St Moritz, highlights a nationwide problem of Italians cheating the tax man by hugely under-declaring their incomes or declaring no income at all.
The spot checks were carried out by a team of 80 officers from Italy's inland revenue agency, who 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 180 euros.
Another 118 sports cars were found to be owned by companies, rather than individuals, for the purposes of tax write-offs.
But of those companies, 19 declared losses for the tax year 2009-2010, while 37 claimed to have made profits of €50,000 or less.
While Cortina's luxury chalets, designer boutiques and stunning natural setting have long made it popular with celebrities and the mega-rich, the "super blitz", as it was dubbed by the Italian media, sent a chill through its Italian clientele.
The checks came at the height of the ski season, when the population of the town, which hosted the 1956 Winter Olympics, 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.
When the town was targeted in the Dec 30 crackdown, dozens of businesses, apparently spooked by the attention of the tax inspectors, admitted earnings that were up to four times what they had declared in the same period last year.
In perhaps the most striking case, inspectors found that the owner of a luxury goods boutique, whose revenue last year amounted to €1.6m, could not produce a single tax receipt or document, suggesting that most if not all of his income went undeclared.
Mario Monti, a former European Commissioner who became prime minister after Silvio Berlusconi resigned in November, is attempting to tackle Italy's €1.9 trillion national debt and balance the budget by next year, in part by trying to force Italians to pay their taxes.
But he faces a Herculean task – a recent government study estimated that Italy's black economy, which includes evasion of income tax and VAT, amounts to €275bn year, or 17.5pc of GDP.
In a country where restaurants continue to do a brisk trade and smart new cars ply the motorways, only 72,000 Italians last year declared a gross annual income of more than €200,000 – representing just 0.17pc of all tax payers.
Economists have calculated that had Italy collected taxes as rigorously as Britain and the US in the last 40 years, the country's national debt would now be 80pc of GDP rather than 120pc.
The raids caused indignation among locals and visitors in Cortina, who said that the high-profile resort had been unfairly demonised as a nest of rich tax evaders, when the problem was widespread.
"Cortina is no different from the rest of the country," a local businessman, Guido Barilla, told 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."
"I don't want to defend tax evaders, but the crackdown should be extended to the whole country, not just Cortina," said Antonio Costato, an executive and a member of Confindustria, the Italian employers' association.
Former members of Mr Berlusconi's conservative coalition, which was perceived as being soft on tax evasion, criticised the operation as a "media stunt" motivated by envy of the rich.