Italy's prime minister Romano Prodi has said that projected tax cuts will be withheld until tax evasion is slashed. He said in Rome that evasion had reached 'indecent proportions'. Deputy finance minister Vincenzo Visco reporting to the Senate said that the untaxed economy accounted for 27% of GDP. Italy's GDP is $2 trillion.
Eurispes, an Italian research foundation, said that 25% of Italy's 40 million taxpayers declared annual income of less than $8,000. Around 95% said they earned less than $54,000.
The government is aware that evasion is widespread because the Bank of Italy's figures for consumer spending are far higher, pro rata, than income reported.
Tax inspectors identified $17.6 billion of unpaid taxes last year and managed to recover $4.5 billion. This was a 49% increase over the unpaid taxes recovered in 2005.
