The Huge Tax Evasion Problem in Italy
Europe has been in the news given all the problems countries are having staying afloat. The huge tax evasion problem in Italy explains why this country is such a mess.
Greece has gone down in flames given its huge debt problems. The big fear with the European Union is that other countries will soon follow. There are real concerns with countries like Portugal, Spain, the United Kingdom and Italy in this regard.
Most of the concern has to do with large debt and social entitlement obligations, but Italy is a bit different. Yes, it also has promised its citizens benefits that it can’t possibly meet in the future, but it has a bigger issue. It has perhaps one of the worst tax evasion problems found in first world countries. Well, at least after Russia.
Italy is reporting it misses out on approximately $178 billion dollars a year because of tax evasion. That may not sound like a huge number, but one has to keep in mind that the Italian economy is much smaller than locations like the United States. A better way to understand the problem is to realize that fully 22 percent of the taxable transactions in Italy are never reported. Apparently, the Italian tax agency is a bit less aggressive than the IRS!
The European Union was always a good idea that had insurmountable practical problems. The simple fact is so many countries with their own way of doing things cannot live under one currency. Greece needed roughly $170 billion to cover its debt obligations. The tax evasion problem in Italy is more than this amount! How do you think the Germans will feel about a request from Italy for help should it come to that? Probably not very good.