|An Italian Economy Ministry spokesman announced recently that the government intends to extend a tax amnesty on foreign-based funds until October 16 this year.
The amnesty is similar to that being considered in Germany and elsewhere, and is designed to allow investors to repatriate undeclared funds placed in offshore accounts and investments. The amnesty initially lapsed on May 16 this year and has raised about 8.5 billion euros over the past year, according to the Economic Ministry spokesman. By extending the amnesty until October, some experts estimate that a further 3 billion euros will flow back to Italy.
Although the amount repatriated was greater than the government had anticipated, the initiative not nearly as successful as a similar amnesty put in place last year, which saw 60 billion euros flow back to Italy, earning the state coffers around 1.5 billion euros in fees levied in return for the lifting of penalties.
However, although the amnesty campaigns have been a useful tool for the government in attracting extra tax revenue, the readiness with which Italy tends to resort to such measures has been criticised by some observers. Pasquale Diana, an economist at J.P. Morgan Chase & Co. in London told Bloomberg that the amnesties worked well in practice, but were perhaps not such a good idea in principle: "If Italians can look forward to pardons every year the incentive to pay taxes drops even further," she observed, adding: "They can't go ahead with pardons, they need to tackle the problems of deficit and spending head on."
Despite having the worst debt level of all of the twelve eurozone natons, for which Italy has received strong criticism from the EU, the Berlusconi administration has announced that it intends to go ahead with a 5.5 billion euro tax cut package this year.