Italy’s ‘pretend poor’ face tax blitz

Italy’s smartest islands and summer resorts are to be the next target of a tough new crackdown on tax evasion, in a move that has the country’s rich and famous quaking in their Gucci loafers.

Exclusive retreats such as the hilltop town of Taormina in Sicily, the Costa Smeralda or Emerald Coast of Sardinia, where billionaire former prime minister Silvio Berlusconi has a lavish villa, and Capri in the Bay of Naples — whose previous wealthy residents include the Emperor Tiberius and Graham Greene — are next in the line of fire as the government tries to recoup billions in lost tax revenues.

Italy’s inland revenue service and its tax police, the Guardia di Finanza, are broadening their campaign following the success of a Christmas operation in the country’s most chic ski resort, Cortina d’ampezzo, which revealed tax evasion on an endemic scale, not only among local boutiques and restaurants, but among their Lamborghini-driving patrons, too.

The assault on what is effectively a national sport in Italy represents a dramatic departure from the approach of Berlusconi, who, during three terms as prime minister, tacitly — or on some occasions, explicitly — condoned tax dodging.

It is part of a concerted effort to restore market confidence in the country’s stagnant economy and reduce to less dangerous levels its crippling $1.9-trillion debt.

More jaw-dropping statistics emerged from the tax authorities Friday, illustrating the scale of the challenge faced by the straight-talking technical government of Mario Monti, who replaced Berlusconi’s discredited conservative coalition, in trying to convince Italians to pay their dues to the state’s coffers.

Of the country’s four million taxpayers, nearly 66 per cent claim an annual income of 26,000 or less.

Despite their apparently breadline salaries, 188,000 own a high-powered car such as a Maserati, Ferrari or Porsche, and 42,000 own yachts.

Another 518 manage to eke out their modest earnings to such a successful degree that they own and run private jets or helicopters.

The Italian media dubbed them “the pretend poor” — people of clearly substantial means who must be massively under-declaring their real earnings to be able to buy $260,000 Ferraris, BMWS and Mercedes.