The intensifying Italian tax amnesty has sparked a war of words and protests from Switzerland about perceived heavy-handed tactics from its neighbour.
Switzerland has complained about being singled out for tougher treatment and resents Italian police "spying" on the border. Italy says it has had enough of Switzerland encouraging citizens to dodge taxes.
This is not the first time Italy has launched a tax amnesty aimed at repatriating hidden funds back home ? in fact it's the third in nine years. And increased border surveillance using cameras was also in use during the previous amnesty.
However, such filming and sending undercover tax officials to Switzerland has this time drawn a stinging response from Ticino parliamentarian and leader of the centre-right Radical Party, Fulvio Pelli.
"To be filmed and controlled in secret is unacceptable to Swiss citizens," Pelli wrote to the Italian Corriere della Sera newspaper.
Another repeat feature of the tax repatriation drive is closer scrutiny of wealthy individuals and companies that set up home or operations in Switzerland. Italian officials are demanding proof that such activities are not a front for tax evasion.
Feeling of resentment
Many of the 70,000 Italian nationals living in the southern Swiss canton of Ticino have been left "disorientated" by the edicts emanating from Rome, according to Mauro Baranzini, a professor of economics an Lugano University.
"There is a feeling of resentment. They believe the amnesty is just an instrument of the Italian government that does not know what else to do to reduce its budget deficit," he told swissinfo.ch.
Baranzini added that the cantonal authorities send to Italy 40 per cent of income tax levied on the 55,000 Italian workers who cross the border each day to work in Switzerland.
The mood in Switzerland has been blackened this time by the underlying global tax evasion crusade that has laid siege to the country. Switzerland has already been forced to promise closer cooperation with other tax regimes and to hand over records of UBS bank client to the United States.
Many Swiss interpret this as an attack on sovereignty by jealous countries desperate to paper over the cracks of their own mess with a quick-fix cash injection and to divert blame from their own failings.
Inflammatory language
The rising anger has been further fuelled by some of the language being employed over the border. Italian Finance Minister Giulio Tremonti has talked about "bleeding Lugano's banking sector dry".
The Italian measures represent a direct threat to the lucrative banking sector in the canton's largest city. Unlike previous amnesties, Italians must now repatriate assets from Switzerland to take advantage of the generous terms.
Italy believes up to ?125 billion (SFr188.8 billion) of undeclared assets are hidden in Ticino banks, more than half of the worldwide total.
"The problem is not so much the amnesty itself, but the way it is being carried out, such as the way the Italian finance minister expresses himself about the Swiss financial centre," Alfredo Gysi, president of the Association of Foreign Banks in Switzerland, told the Finanz & Wirtschaft newspaper.
The Ticino Bankers Association met Swiss Finance Minister Hans-Rudolf Merz on Thursday to express its concerns. A delegation from the cantonal government is due to meet Merz shortly.
ITALIAN TAX AMNESTY
Italy's parliament voted for a third tax amnesty in nine years on October 2. It will run until December 15.
Tax dodgers who come forward anonymously will receive the relatively light one-off tax rate of 5%.
Italians with accounts within the European Union, along with other countries such as the US, Japan, Mexico and Australia, can keep their funds at those banks. But clients of Swiss banks have been told they must return their assets to Italy.
Amnesties in 2001 and 2003 raised an estimated EU 2.1 billion for the national coffers.
This time, Italy hopes to raise some EU 5 billion in revenues and repatriate many more billions of undeclared assets.
The United States and Britain are among other countries that are operating, or have recently staged, tax amnesties.
1 comments:
Gentlemen,
I must disagree. It is ironic that the Italian government/politicians should condemn banking practices that include secrecy and strict confidentiality when Italian bankers themselves developed similar policies more than 900 years ago. If fiscal policy, another Italian invention, had been more “people friendly” over the last century or so, citizens would have more confidence in their ministry of finance and revenues that fiscal policy was indeed for the betterment of the people. Instead, they often drained the treasury into the pockets of Italian or foreign industrialists and ultimately their Swiss bank accounts with Quixotic military forays in Africa and other parts of the World. And why just foreign bank accounts/havens; 30% of GDP, that is 750B$ in domestically generated income eludes treasury ledgers; roughly stated at current marginal tax rates, that’s 300B$ in lost revenues.
Of course we need the banks of smaller countries (Switzerland, Caymans, Monaco) to be more transparent about how they manage foreign investments/deposits; it’s a question of implementing some simple common sense policies that would be ENFORCED by international judicial bodies. Enforcement is the key element and should be pursued aggressively; not relegated to a campaign cliché. Most importantly, we need to “educate” shiftless politicians about fiscal probity and fairness or they’ll tax us to death to cover their incompetence. In my country (Canada), only about 41% of eligible tax-payers actually pay income taxes; the rest VOTE...... for a government that promises generous social and income stabilization programs!! Indeed, if your income tax reports are prepared by a professional (e.g., chartered accountant), meaning benefiting from LEGAL tax breaks, one risks being audited annually. It is totally disingenuous for elected government officials to pontificate about tax evasion and its impact on fiscal spending when they are to blame for drafting legislation that actually encourages such practices. Lastly, I will not debase myself with comments on the border surveillance systems or tax amnesty.
Cheers
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