In Times of Austerity, Italy’s Ministers Are Forced To Return Gifts

Last Updated: 10, February 2012

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Italian Prime Minister Mario Monti has a tough job cleaning up after the disgraced Silvio Berlusconi. From tough pension reforms to cracking down on tax evaders, Monti is now insisting that his ministers cut back on entertainment expenses and return gifts that cost more than 150 euros.

As Mario Monti tires to steer the Italian economy back on growth course, newswire Adnkronos reported yesterday that ministers and staff of the Prime Minister’s office and the Finance Ministry are no longer entitled to incur entertainment expenses.

Additionally, civil servants are no longer allowed to receive gifts larger than 150 euros (US$199). According to an official statement, gifts with values exceeding 150 euros would have to be returned, or transferred to the employee’s public administration agency.

The statement said:

[quote] Ethics codes must be followed, with particular reference to those related to the prohibition of accepting gifts of any nature that are valued at more than 150 euros in order to avoid the interpretation…that their purpose it to inappropriately acquire influence. [/quote]

Monti and his team of unelected technocrats took over public office in November amid an economic crisis that threatened to see Italy default on its 1.9 trillion euro debt. Since then, Monti has pushed through a series of tough economic reforms including pension changes and unpopular tax hikes.

According to the AFP, Italy’s financial police, the Guardia di Finanza, are also out in full force, targeting luxury car owners in a crackdown of tax cheats.

Since late January, the police have spread out across Milan, Rome, Florence and the wealthy North-East region, halting hundreds of luxury SUVs, Ferraris and Lamborghinis. At these checkpoints, drivers’ license and car registration details are recorded and passed on to the tax authorities, who then go through tax records to see if the right amount of income has been declared and due taxes paid.

43 year old Andrea, who declined to give Businessweek his full name for fear of the tax man said:

[quote] I’ve been stopped three times in the last few weeks by authorities because I’m driving a luxury SUV. It seems like the McCarthy era in America. You’re guilty by suspicion. [/quote]

Italy’s tax authority estimates that the indebted country loses almost 120 billion euros each year from tax evasion.

Luxury is now heavily taxed, thanks to reform changes by Monti. For example, an owner of a 316,000 euros Lamborghini Aventador will now have to pay 8,400 euros in annual taxes, a sharp spike of 6,600 euros.

In defense of “honest taxpayers”, Monti said:

[quote] It’s unacceptable that workers have to make sacrifices while a major chunk of wealth is not taxed. [/quote]

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