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Berlusconi accused over ‘ruling caste’ tax amnesty

July 16, 2009

By Guy Dinmore in Rome, published on FT July 16 2009

Italy’s centre-right government yesterday officially proposed a tax amnesty aimed at repatriating billions of euros – the bulk believed to be held in Swiss bank accounts — on the most favourable terms yet offered to tax evaders by an EU member state.

The proposed amnesty will be the third offered by Silvio Berlusconi’s centre-right government following similar packages in 2001 and 2003 which brought some 46bn euros in funds back to Italy and earned the government 2.1bn euros in revenues.

A government source said Rome was waiting last night for the final green light from the European Commission which had been closely involved in drawing up the plan. Brussels blocked an earlier proposal to make a more favourable tax rate conditional on buying state bonds or shares in state-controlled companies.

Rome was still waiting for Brussels to decide whether the amnesty could be made conditional on the repatriation of untaxed funds from non-EU states. Switzerland accounted for 58.3 per cent of money repatriated previously, official Italian figures show.

“The true benefit of this measure is that it will close Ali Baba’s cave,” Giulio Tremonti, finance minister who also oversaw the first two amnesties, told a news conference. “Measures are useless if they leave tax havens open.”

Antonio di Pietro, a former anti-corruption prosecutor who heads the second largest opposition party in parliament, denounced the proposal which he said allows the “ruling caste to bring back illegal profits while normal people cannot even make it to the end of the month.”

“We are in front of a two-speed Italy,” he said, accusing Mr Berlusconi, a billionaire media mogul, and other prominent industrialists of planning to use the amnesty for their own ends.

Confindustria, the employers’ lobby, welcomed the measure, saying it “supports any such measure that increases the capital available to Italian businesses, while respecting European regulation, and that helps preserve and create jobs.”

Mr Tremonti denied that the amnesty went against the spirit of the crackdown on tax havens that Italy and other G20 member states are pursuing. Thinking he was off microphone, he was then heard swearing at a reporter who pursued the question. He gave no details of the term of the amnesty which is to be presented to parliament as an amendment to a government anti-crisis package.

A government source said the amnesty offered the equivalent of a tax of one per cent on the capital each year it was abroad, and was the most generous offered by an EU state.
Government supporters argue that carrying the fight against tax havens requires both the “stick” carried by the G20 and the “carrot” of attractive amnesties. They said an earlier amnesty offered by Germany was unsuccessful because the tax rates were pitched too high.

Officials denied newspaper reports that the amnesty would also exempt tax evaders from possible prosecution for other offences such as false accounting.

Italy’s government finances are in a critical state. Tax revenues are falling, and public debt is running at about 114 per cent of GDP.

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