Month: March 2012

As Italy Cracks Down on Tax Cheats, the Wealthy Are Ditching Their Porsches

Time has just published my story on Italy’s fight against fast-driving tax evaders.

A fast car is supposed to be a means of escape. In Italy, it’s become one of the best ways to get caught. The land of Ferrari, Lamborghini and Maserati is getting tough on tax evaders, and police have taken to stopping drivers of high-end SUVs and luxury cars and forwarding their information to the tax authorities to make sure the income they’ve declared (and paid taxes on) matches their expenditures. “It’s become invasive,” says Alessandro Zaffarani, a Rome resident. While driving his wife’s car — a BMW SUV — in December, he was pulled over twice in the course of half an hour. “They can stop you at any moment, not to ask you for the documents of the car, but for yours, as a person,” he says.

According to Zaffarani, who runs a Chevrolet dealership in Rome, the scrutiny has also cut into business. Faced with a new tax on cars with powerful engines, a still stumbling economy and some of the highest gas prices in the world, buyers were already more reluctant to enter the lot. Now tax evaders don’t want to risk getting caught either. And honest car buyers often don’t want the hassle of additional attention. “At this moment, the market is paralyzed,” says Zaffarani. In January, he suspended a promotion for the Chevy Camaro when demand dried up.

Read the rest.

In Cash-Strapped Italy, Vatican Pushed to Pay More Taxes

Time has just published my piece about the Italian government’s effort to clarify the Catholic Church’s tax status.

Much of the coverage of a controversial new law winding its way through the Italian Parliament has portrayed the measure as a Nixon-to-China moment. It takes somebody like Prime Minister Mario Monti, the thinking goes, who is not only a practicing Catholic but also a graduate of a Jesuit school, to take on the Catholic Church in Italy and make it pay taxes on its commercial property.

In truth, however, the proposed law would do very little to change the existing legal situation. While the current legislation is muddled in many ways, one thing is clear: religious organizations have been required to pay taxes on property used for commercial purposes since at least 2005, when the country’s high court issued a ruling to that effect. The problem is that with the law currently on the books, it’s not always clear what is and what isn’t a commercial property. Monti’s proposal doesn’t upend the status quo — it merely reinforces it, cleaning up the legislative language and eliminating gray areas. “It’s not a new law,” says Marco Tarquinio, the editor of Avvenire, a daily newspaper owned by the Catholics Bishop’s Conference. “It’s a clarification of law that already existed.”

Read the rest.