Monday, December 26, 2011

Stat of the day

Italy is filled with colorful anomalies. According to tax officials, nearly half of boats larger than 35 feet are registered to people who declare income of less than $26,000 a year, and 604 airplane owners declared annual income between $26,000 and $65,000.
Also revealing:
Many Italians say rule-breaking is a question of survival. “When I first opened my restaurant, my accountant sat me down and told me that if I wanted to pay all my taxes, I might as well close up shop immediately,” said Giuseppe, a restaurant owner in Rome who said he was a basically honest person who had been “forced to evade taxes” because of Italy’s costly fiscal system. 
Like many Italian restaurateurs, Giuseppe does not always present diners with a cash-register receipt at the end of the meal, so the sale is not legally registered and, therefore, not taxed. “If I didn’t do it, I just wouldn’t survive,” he said. “If we respected all the rules from A to Z, prices would be considerably higher for what you eat.” 
For Giuseppe, running a business involves keeping complex records. Provisions he buys without receipts have to disappear without being tallied; he pays waiters under the table for overtime, evading payroll taxes, which are above 40 percent. “I can’t afford to pay overtime and they can’t afford to live on their base salaries,” he said. “This way, we both benefit.” 
Business associations have urged the government to reduce the tax burden for companies and workers and raise it on assets. This month, the governor of the Bank of Italy, Ignazio Visco, said that Italy’s tax burden had risen to 45 percent over all and called for urgent reforms to help lower it. 
“Tax evasion has a significant impact on growth,” said Alberto Bisin, an economist at New York University. He said it kept companies from expanding by keeping productivity low — and less traceable. “I’m not saying that we should let people evade,” but that reform is difficult as long taxes are so high, he said.
One could be forgiven for thinking that taxes and regulation are harmful to the economy. 

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