Sunday 22 October 2017

Time has finally come to pay the piper for this corrupt, tax-evading nation

Nick Squires in Rome

Decades of turning a blind eye to endemic tax evasion, corruption, and dismal economic growth has brought Italy careering into its present crisis.

The country may be renowned for globally known brands such as Fiat, Ferrari, Gucci and Armani, but the eurozone's third-largest economy has been hobbled by the chronic failure of successive governments, not just those of Silvio Berlusconi, to enact far-reaching reforms.

On the streets of Rome, Italians may express relief and grim satisfaction that Mr Berlusconi has announced his intention to resign, but may know the country's entrenched problems went way beyond the failings of the scandal-prone prime minister.

Notwithstanding the hackneyed 'Dolce Vita' and 'Under the Tuscan Sun' images of their country, Italy's people know they been sleepwalking into an economic abyss for years and must now pay the price.

Despite a still healthy manufacturing sector, the country has, for years, been spending more than it earns, resulting in a staggering 1.9trillion public debt -- about 120pc of its annual economic output.

Last year, Italy's output was smaller than in 2005, adjusted for inflation. According to the IMF, growth this year will amount to a paltry 0.6pc, with an even more miserable rate of 0.3pc forecast for 2012.

The country's dismally low growth is a consequence of corruption; a bloated bureaucracy; an overpaid and cosseted political class; stifling bureaucracy; low productivity and a third-rate educational system.

Mafia

On almost all those indices, the problems in the 'Mezzogiorno', the sun-baked, Mafia-plagued south of Italy, are much more acute than in the wealthy north, highlighting a regional divide which has existed since unification in 1861.

Of the world's top 200 universities, only one is Italian -- Bologna University in the north.

Italy also performs poorly in global rankings of transparency and competitiveness.

In the World Economic Forum's competitiveness index, it came 48th, beneath countries such as Indonesia, Oman and Brunei.

In Transparency International's annual corruption index, Italy was ranked 67th, below Rwanda, Samoa and Macedonia. Italy's own statistics Agency has estimated that the 'black' or 'under-the-table' economy makes up at least 16pc of GDP.

Tax evasion is almost a national sport. Italians resent paying high taxes when they feel they get little in return -- streets are pot-holed, hospitals are overcrowded, playgrounds are, in places, smashed up and covered in graffiti and public transport is often outdated.

And they have been set a terrible example -- among the plethora of accusations that Mr Berlusconi has faced in his many trials is that of tax fraud and false accounting.

"How do you expect Italians to respect the rules when the law is ignored by our politicians?" asked Alessio (42) who sells t-shirts and souvenirs from a shop overlooking the Trevi Fountain in Rome .

"But the problem is not just Berlusconi. We've had these issues for 30 or 40 years and no one has done anything about them. Now the hole is too deep. I see very little hope."

Getting a well-paid job in Italy often depends not on merit but 'raccomandazioni' or connections -- in other words, it's not what, but who, you know.

While millions of older Italians have jobs for life, their children scrabble from one short- term contract to another and often work for free as they try to claw their way into their chosen field.

The unemployment rate for young people between the ages of 15 and 24 is close to 30pc.

Seeing no prospects at home, young Italians are leaving in droves to seek better opportunities in Britain, the US, Australia and the Gulf, in a brain drain that will deprive the country of entrepreneurial talent.

"Many of my friends have left the country in search of a better life," said Antonio Lardo (28) a graduate who had dreams of becoming a teacher but instead sells sketches in a cobbled lane. "There's no decent work here."

Italy's fat-cat politicians are also a drain on the public purse. The 945 members of the senate and the chamber of deputies earn an average annual salary of €140,000.

Their benefits include generous pensions, free flights and train travel and subsidised haircuts in the parliamentary barber shop -- giving new meaning to the phrase 'fringe benefits'.

"Their salaries need to be cut immediately," said Luisa Calvanese (40) who runs a photography shop a few streets away from parliament. "Both sides of politics, the left and the right, make cuts which affect ordinary people, but never themselves." So even with Mr Berlusconi on his way out after 17 years at the heart of Italian politics, the prospects for meaningful change look distant. (© Daily Telegraph, London)

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