How seriously does the Italian government take the fight against tax evasion? Prime Minister Giorgia Meloni compared the tax claims against small businesses with the protection money of the mafia at a campaign event in Catania, Sicily, on Saturday. The government will lead the fight against tax evasion "where it is real: with large companies, with banks and with VAT – not with small traders, where the state demands protection money," she said.

Christian Schubert

Economic correspondent for Italy and Greece.

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In Italy, the word "protection money" ("pizzo") is associated with the mafia, which likes to blackmail small businesses under the threat of violence. Meloni's choice of words, especially in Sicily, immediately sparked a debate in Italy. The economist and former state secretary Cecilia Guerra, who belongs to the social democratically oriented opposition party PD, spoke of an "extremely questionable" statement. "When you say that, it means that the state is behaving like a criminal organization towards taxpayers. Taxation is the instrument for the functioning of collective goods – not an instrument of blackmail," she told the newspaper "Repubblica".

Considerable burden from taxes and social security contributions

Italy has long had a major problem with tax evasion and the black economy. In the case of income tax for the self-employed protected by Meloni, the tax gap between potential and actual revenue even rose to an all-time high of almost 2020 percent in 69, the last year available, according to the Ministry of Finance. Almost 28 billion euros escaped the state. Although he has recently made progress on VAT evasion, it is still high. According to the Catholic University of Milan, tax evasion in 2019 amounted to 21.3 percent of the income due to the state; in France it is only 7.4 percent, in Spain 6.9 percent and in Germany 8.8 percent. Together with other taxes, Italy loses around 100 billion euros annually to tax evasion.

Not taking tax liability so seriously is accepted in many places. "Those who evade taxes usually feel no shame," sociology professor Adele Bianco wrote in a study last year. In this respect, Italy differs significantly from other countries. Nevertheless, every government is judged by how courageously it takes action against tax evasion.

The criticism of Meloni already arose when she raised the cash cap for payments in business transactions, which is intended to combat tax evasion and money laundering, from 2000 to 5000 euros. In addition, the latest budget law provides for various measures for "tax peace" with which taxpayers can "clean" arrears in exchange for generous deductions. Tax assessments with a value of up to 1000 euros, which were sent up to 2015, are even completely cancelled. Independent institutions such as the Banca d'Italia have criticised these measures. The burden of taxes and social security contributions is also considerable because of tax evasion: in terms of gross domestic product, it is only surpassed by Denmark, France and Austria.