Italy Economy Real Time Data Charts

Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Italy related comment. He also maintains a collection of constantly updated Italy economy charts together with short text updates on a Storify dedicated page Italy - Lost in Stagnation?


Thursday, October 12, 2006

Tax Evasion At 50%?

``There are certain provinces and certain sectors where fiscal irregularities are higher than 50 percent and the level of tax evasion is higher even than the income being declared''

This according to Italian Deputy Finance Minister Vincenzo Visco is a reasonable estimate of the efficacy of the fiscal authorities in collecting revenue in some parts of Italy. One example given by Bloomberg: a recent study by the Italian fiscal agency (using 2004 data) found that the median salary declared to tax authorities for 50 professions, ranging from seamstresses to dentists, was 26,095 euros, a figure more or less equivalent to the salary of a public high-school teacher. In 2003 ISTAT estimated the informal economy in Italy as being worth some 16.7 percent of gross domestic product, a figure which is surely a substantial underestimate.

Now one point needs to be made very clear here. The high level of informal economic activity is often cited as evidence for the fact that Italy is a much richer country than appears to be the case, and that is almost certainly true. However this argument is often brought out when discussing the fundability of the Italian government debt moving forward and the possibility of default. Unfortunately this argument is entirely irrelevant here, as Standard and Poor's recently pointed out in the context of Greece's surprising upward revision of of its GDP: informal activity does not in and of itself influence the fundability of the deficit since it is, by definition, not taxed.

However, clearly the existence of such activity does mean there is a potential for revenue raising by incorporating it into the formal economy. One such move has been the regularisation of 'irregular' migrants (and one wonders how much of the industrial output increase this year has been a result of the 'officialisation' of such previously unofficial activity). Other such measures are contained in the 2007 budget proposals, and obviously one way of measuring just how much progress Italy makes next year towards sustainability will be in just how much extra revenue the Italian exchequer is able to generate in this way.

3 comments:

Paris ib said...

What a surprise! Another negative comment about Italy!! And another post which supposes that the Italian Government could/would default on its debt to the Italian people. And then the Italian Government would do what? Emigrate on mass before their aunts and uncles lynch them? Or will they sell all their own Italian Treasuries before they decide to default on this debt???? What is the thinking here? The Italian Government is totally separate and unconnected with the Italian people who are funding the Deficit and the Debt??

No matter here are some interesting bits of information about: FIAT which you have either missed or ignored in your campaign to misunderstand Italy:

FIAT increases market share in Europe.

When you get a serious blog, with serious information maybe you will start to take notice of what is actually taking place in Italy.

Paris ib said...

Oh and some hard data on the Italian Deficit:

Deficit falls in Italy.

Now that's another statistic which you appear to have missed.

Edward Hugh said...

Hi Paris,

(Genuinely, and without irony) thanks for the questions. I have - with Paola's help - done something about the first one. I will try and put something up on the deficit situation during the week.