The so-called Redditometro, or “income metre”, is said to enable the authorities to analyse household spending patterns and compare these with the household’s earnings, in order to target what are described as the country’s most spudorata, or “shameless”, tax evaders.
However, as a number of Italian newspapers, including La Repubblica, Il Messaggero and Corriere della Sera, have reported, the introduction this month of the Redditometro has resulted in complaints that it is unfair, particularly to some pensioners, or others, who might spend a considerable amount, relative to their income, on such necessities as healthcare.
The Redditometro works by classifying people into one of 11 categories of household types, and then flagging up those whose spending patterns seem unusual for their group and income, based on the norm.
Regional variations are also taken into account, as some parts of Italy are more affluent than others, and thus some residents normally spend more. Italy’s north, for example, is generally considered wealthier than its south.
A family that is found to spend significantly more than it might be expected to, given the category it falls into and the region it lives in, might be in line for questioning by the tax authorities.
The introduction of the new system comes as Italy, which has been plagued by problems with tax evasion for decades, struggles to get its economy back on track after the recent global financial crisis.
According to a story on the BBC’s website yesterday, the Italian authorities estimate that tax evaders cost the country’s economy as much as €120bn (£100bn, $160bn) annually in lost revenue.
The story quotes Piero Ostellino, a columnist for the Corriere della Sera newspaper, as saying that although he does not defend tax evasion, he objects to the state’s investigating “how you live, what you buy, what you wear…I don’t think tax collection should be done by trampling on individual liberties".
Ostellino added, the BBC report went on, that a cardinal ought to be able to buy a pornographic magazine “every month" if he wanted to "without having to explain this to the tax authorities".
Variation on a tax crackdown theme
John Westwood, group managing director for Blacktower Financial Management International, one of relatively few advisory firms catering for expats with offices in Italy, said the redditometro was a variation on a general theme under way across Europe, as countries pursued tax evaders and tightened up on their enforcement measures.
As a result, he added, "at BFMG, we have seen a surge of enquiries from our expat clients, requesting that we carry out reviews of the [tax] arrangements they have in place.
"I think everybody expects the tax enforcement regime to just get tougher."
In Rome, Gareth Horsfall, who looks after expatriates there and elsewhere in Italy for the Spectrum IFA Group, said foreigners living in that country cannot afford to ignore the redditometro.
“The general consensus is that it will be implemented and used to its full force within a few years,” he said.
“Unfortunately it does not come at a good time. Italian resident expats and Italian nationals alike are suffering more and more taxes, penalties and fines, in a bid to generate tax revenue and pay down the country debt.”
According to Horsfall, the current backlash to the redditometro reflects a widespread belief that it is part of a general system of fines and penalties many Italians, as well as the EU, consider “unfair and unjust”.
“So while the Redditometro will help the Guardia di Finanza to issue more tax and fine demands at unsuspecting expat and nationals alike,” in an effort to generate revenue for the government coffers, Horsfall says, many Italians remain certain that it will “miss the real culprits”, who, they believe, will “continue to go undetected”.
