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Archive for the tag “Italian tax”

Nobody expects the Spanish Inquisition

monty-spanish

And now for something completely different…

As Inquisitions go, the Spanish one went quite recently. The last garroting took place in 1826, with abandonment of the 350 year-old program in 1834. Portugal had, by then, put that sad part of its history behind her, while the Papal States, and their offshoot The Vatican, finally got round to announcing their Inquisition’s requiem in 1908, and its requiem aeternam in 1965. Parting was, evidently, such sweet sorrow.

Despite the Renaissance and all that followed, and despite the receding risk of having one’s soul removed from one’s body by religious force, the Catholic Church (and in its wake, other Christian sects and religions) has historically been treated with kid gloves – nowhere more notably than in the field of taxation.

Several nations have agreements with the Vatican governing that institution’s extensive property holdings, which provide extensive exemptions from income tax and property taxes. In addition, for various reasons (e.g. in the US, the Establishment clause of the First Amendment; in other nations, the contribution to the public good) nations include religions of all stripes in their tax-free, not-for-profit legislation.

Where the real clash occurs is when a religious institution earns commercial income. Income tax is a dogmatic no-brainer (though not according to all those agreements); but property taxes are in another world.

Salvation has possibly come in the form of the European Union, the Godless machinery of which has just come up, for at least the second time, with a fortuitous deus ex machina.

On June 27th, the European Court of Justice issued a judgment that Spain’s municipal construction and building tax could apply to Catholic Church property used for educational purposes not funded by the Spanish government. This was despite a Spanish High Court ruling enforcing a 1979 agreement with the Vatican that no taxes could apply to property and earnings from property owned by the Holy See and its offshoots. The miraculous solution was unlawful state aid – which, in the EU canon, is up there with adultery and child-sacrifice. The case was referred back to the Spanish courts for consideration – the presiding judges of which will presumably not need to stretch Church representatives on the rack or burn them at the stake in order to enforce an equitable solution.

On a previous occasion, in 2012, thanks to pressure from the EU over the same unlawful state aid, then Italian Prime Minister Mario Monti was handed the moral strength to strong-arm the Vatican into paying taxes on commercial properties around Italy, which hitherto had been tax exempt if they included some token religious symbol, like a chapel in a converted monastery hotel. Meanwhile, the Vatican itself remained a tax sanctuary, although the cash-strapped city of Rome has in recent years been trying to get the pope, who happens to live there and has expressed personal support for taxation, to pass the collection plate among the moneychangers at the entrance to the Vatican museum and its lucrative shop.

Other countries, unable to brandish the symbol of unlawful state aid, that have been trying to reach a modus vivendi with the Church will welcome the ECJ’s decision; notably Zimbabwe, that paragon of taxation virtue, and Israel, where it all started when an idealistic young man exhorted his countrymen to ‘render unto Caesar the things that are Caesar’s ’. But then, in those days, all roads led to Rome.

 

 

Roman Circus

Didn't anybody tell them that the Messiah will have a beard?

Didn’t anybody tell them that the Messiah will have a beard?

“He is not the Messiah, he is a very naughty boy”. Thus spake Mandy Cohen, mother of Brian, to the ignorant  mob besieging her home,  rejecting  their mindless veneration of  her son. Her statement would have been appropriate at many points in history – the world has had no shortage of false messiahs. The human condition demands hope. When collective hope is lost, up pops an improbable saviour  promising salvation. Same plot, different protagonists.

Once upon a time they could plug into religion for a narrative (the occasional halo-wearer  still raises his angelic head in third world countries as well as American States south of the Mason Dixon Line) but in the cynical, secular modern world despair has to seek new panaceas.

Nowadays, the Hosannas are reserved for General Elections. The Eurozone crisis and its aftermath of German imposed austerity led to hope-inspiring changes of government in, among others,  Greece, Ireland, Spain and France (alright – maybe not France).  However, after a period of technocratic rule it was left to the Gigolos of Europe to take the Faustian route and threaten to bugger the entire European enterprise.

Having rid themselves in 2011 of an administration that seemed to govern from the loins, the Italians went on to remarkable things under the unelected  Mario Monti. Then, just as things were starting to straighten out, the former prime minister awoke from a court-case-induced coma and brought down the Government.

Now, in any normal country the expected result in the ensuing election would have been an outpouring of support for Mr Monti and an AC Milan football kicked up the buttocks of that venerable team’s chairman. But not Italy, a country where they strive to walk on water.

Rather than take the whole thing seriously Italian voters decided, as one man, to kick off their shoes, pass round a  communal joint, lie back  and inhale their way out of reality. Hallelujah!

Every Brit knows what a bidet is for

Every Brit knows what a bidet is for

The good news was that ex-King Bunga-Bunga did not win. The bad news was that neither did anybody else. A full 25% of eligible voters stayed home to watch Bunga-Bunga-owned television and Bunga-Bunga-owned football, while, among those who voted,  25% went for a Billy Connolly lookalike (but not soundalike) “comedian” with knock-out lines like: “Did you know that the British think a bidet is a bath for a violin?”  Duh? The retro any-left-wing- port-in-a-storm Pier Luigi Bersani with 29% scraped only a smidgen more than his nemesis, while Mario Monti, whose only crime was that he had both feet  planted firmly on the ground, picked up a pathetic 10%. His job in the new parliament is expected to be holding up the laugh prompt card.

The Italians proved once more what we have known for years. They do not like taxes and damn the consequences. One of the central features of Berlusconi’s campaign was the repeal and refund of the hated IMU tax that Monti imposed on second homes. Ironically, the expected take from that tax is only €4 billion each year. Meanwhile, anybody who managed to control his tears of mirth long enough to read Beppe Grillo’s blog would know that, while he does not object to taxes in principle, he doesn’t like the ones everybody is talking about at the moment – which is populist poppycock (unless that was supposed to be another of his side-splitting jokes).

If truth be told (and, as this is Italy, why the hell should it?) most responsible macro-economists groveling in search of a Nobel Prize today think that the policy of raising taxes in response to the Eurozone crisis is misjudged. On the other hand that does not justify the  complete abrogation of responsibility by an entire nation to behave like adults (and not just consenting ones). Italian taxes are extremely high. The problem is not the tax rates but the fact that so many residents do not pay their fair share. Like red lights in Rome (of the traffic variety), taxes are a suggestion rather than an order.

Italians rejected Monti, not because he put taxes up but because he came up with clever ideas to catch those not paying them. The Redditometro which, from this month,  enables the authorities to estimate what taxpayers should have declared based on databases of expenses and complex formulae,  is a particular turn-off for the fun-loving population. And what about those cash-strapped citizens who live in fear of the knock at the door of the family Ferarri.

The Italians would rather just lean back and wait for the Messiah – these days a frumpy, middle-aged lady in Berlin who is going to be placed  under steadily more pressure as she faces her own re-election battle later this year.

The Italians never could get the hang of the walking-on-water thing

The Italians never could get the hang of the walking-on-water thing

Of course, Italians and their politicians are not the only ones to make fools of themselves (although nobody can deny that  they are exceedingly good at it). The current political and religious goings on in Rome reminded me of a story from the 1960s when George Brown was British Foreign Secretary. To call a spade a spade,  it was universally known that Brown had a little problem with drink – he could never get enough of it. At a diplomatic ball he eyed a stunning black lady in a striking purple satin evening gown. Plucking up the courage, he ambled over and asked her to dance. “I cannot dance with you for two reasons’, came the curt reply. “Firstly, I do not dance. And, secondly, I am the Archbishop of Lagos”.

Perhaps, if every time Italians had to elect a government they were locked in a room with murals covering the walls and ceilings and not let out until there was a clear victor, they might take the whole process more seriously. On second thoughts, there is more chance of the coming of the Messiah.

La dolce vita

A headline on the front page of today’s International Herald Tribune caught my eye: “Fighting anti-tax mind-set, Italy deploys new tactic: Shame”. Given that this was Italy and that Italy is populated by Italians, the first thing that crossed my mind was, “Yeh..Shame they got caught”. On viewing the accompanying photograph of a class full of  angelic children being instructed to -metaphorically- educate their parents in the moral imperative of  double-entry bookkeeping , I felt that I was probably not far off the mark.

The article does not pull any punches in discussing the disease of rampant and almost overt tax evasion in Italy (it is claimed that 604 airplane owners declared annual income under Euro 50,000 ) but it was a comment of the director of the internal revenue service that was most interesting.

He compared the US and Italian systems. While he claimed that taxation in the US had originated in the far west to pay for the defense of the community, in Italy the first forms of taxation were imposed by princes, often foreign, to finance their battles – with the citizens getting nothing in return. As a result tax evasion became part of the culture right up to the present day.

Got it. Historically mobile morality. I can just see the conversation between two  plumbers fitting a new bathroom in the center of Rome: “Guiseppe, have they agreed to pay cash?” “Of course, Giovanni. I told the owner that your ancestors had their house swiped by the Borgias and he told me he had no problem with paying under the table as he was descended from the Medicis who hated the Borgias – that was a nice bit of luck.”

At the end of the day, however, perhaps these genetically conditioned tax evaders are ahead of their time. With new prime minister Mario Monti’s Euro 30 billion austerity package Italians might be looking once again at being required to pay taxes without getting much in return as the amounts collected are used to pay off  debts to foreign “princes”.

Machiavelli wrote in “The Prince”:”When neither their property nor their honor is touched, the majority of men live content”. That may have been true 500 years ago but, if the Euro crisis is to be solved, let’s hope those schoolchildren make their parents see sense.

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