Bloomberg News

Italy Tax Agents on Frontline of Anti-Austerity Backlash

May 17, 2012

Demonstrators face riot policemen as they try to enter the offices of Equitalia, Italy's state tax-collection agency during a protest against the government's austerity measures in Naples. Photographer: Carlo Hermann/AFP/Getty Images

Demonstrators face riot policemen as they try to enter the offices of Equitalia, Italy's state tax-collection agency during a protest against the government's austerity measures in Naples. Photographer: Carlo Hermann/AFP/Getty Images

For 10 years, Daniela Ballico has been knocking on Romans’ doors seeking back taxes. Now with Italy’s tax-collectors on the front line of an anti-austerity backlash, she no longer has the courage to ring their bells.

Equitalia, the state tax-collection agency, has been targeted in a wave of attacks as Italians chafe under stepped-up efforts to recover an estimated 120 billion euros ($153 billion) in lost revenue from evasion. On May 12, a Molotov cocktail exploded outside Equitalia’s Livorno office, one day after a parcel bomb was delivered to the Rome headquarters, site of a December explosion that tore off part of the general manager’s hand.

“I have never seen such a tense atmosphere” said Ballico, who has been employed by Equitalia since 1998 and is now on temporary leave to work for the UGL labor union. “They call us loan sharks, bloodsuckers; my colleagues have to deal with anxiety and stomach aches every day and they are scared.”

The crackdown is part of Prime Minister Mario Monti’s 20 billion-euro austerity plan that also brought higher taxes, cuts in public spending and record gasoline prices. While the measures may have helped bring down bond yields from euro-era records, they helped push the economy into its fourth recession since 2001, making it harder even for law-abiding Italians to keep up with tax payments.

Rising Violence

Monti today reiterated his government’s “unconditional support” for the tax revenue agency, “firmly” condemning the attacks, he said in a statement after meeting with the agency’s head, Attilio Befera, and Equitalia staff, in Rome. “We can and we must discuss how to reduce the fiscal burden, trying to go after those who escape from taxation,” he said.

Italy will boost security measures against the rising threat of violence, including stepping up the use of armed forces to safeguard more than 14,000 sites across the country, the Interior Ministry said today in a statement after a meeting with the country’s top security officials.

The government has already raised alert levels at some sensitive sites and may even use the army to defend the tax agency, Interior Minister Anna Maria Cancellieri told newspaper la Repubblica in an interview on May 13.

Attacking State

“I would like to stress that attacking Equitalia is the equivalent of attacking the state,” she told the daily.

The government predicts that the country’s tax burden, or tax as a percentage of gross domestic product, will rise to 45.1 percent this year from 42.5 percent in 2011, and won’t start falling until 2015. Italy ranked fourth-highest in the European Union by that measure in 2011.

Italy’s tax-revenue agency recovered 12.7 billion euros from evasion in 2011, up 15.5 percent from 2010. Monti’s government is counting on a further increase this year to help meet its pledge to slash the deficit even with the recession deepening.

The government didn’t include revenue from evasion in its 2012 budget and plans to use any recovered funds as a buffer should regular income miss its target because of the slump. The government forecasts the economy will contract 1.2 percent this year, while the International Monetary Fund predicts a contraction of 1.9 percent.

As part of the crackdown on tax evasion, authorities have targeted owners of luxury cars and boats to stop transgressions by the wealthiest Italians. Still, much of the anger directed at Equitalia is from people with more modest means as the agency is responsible for collecting everything from missed mortgage payments to parking tickets and delinquent school lunch fees.

Hostages

Earlier this month, a 54-year-old small businessman facing financial difficulties and tax debts of around 2,400 euros, took 15 hostages at an Equitalia office near Bergamo for several hours before surrendering to police.

Even as Monti and other politicians seek to quell rising social tensions, anti-austerity protests are spreading with Equitalia serving as a symbol of broader indignation. Around 200 former Fiat SpA (F) workers occupied the Equitalia office in the Sicilian town of Termini Imerese on May 9 to protest the Italian automaker’s decision to shut a plant employing more than 1,400 workers. On May 11, demonstrators clashed with police outside Equitalia’s offices in Naples.

Years of Lead

Authorities are concerned that the rising discontent will fuel more violent attacks in a country with a history of domestic terrorism. Hundreds of people were killed in bombings by the leftist Red Brigades and fascists groups in the 1970s and 1980s in a period known as the Years of Lead. In a throwback to the days when executives and politicians were kneecapped, or shot in the knees, an executive of a Finmeccanica SpA (FNC) unit was shot in the leg outside his home in Genoa on May 7 in an attack claimed by a group calling itself the Informal Anarchist Federation.

The FAI yesterday made a written threat against Monti, Cancellieri and senior officials of Italy’s tax agency.

“As the debt crisis worsens, we are likely to see more episodes like this,” said Alberto Mingardi, head of the pro- free market Bruno Leoni research center in Turin, about the attacks on Equitalia.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net;

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus