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EUROPE

Italy tops the table for tax dodging in Europe – again

The amount of lost VAT revenue in Italy was once again found to be the biggest in Europe, with the UK in second place.

Italy tops the table for tax dodging in Europe - again
Photo: Ina Fassbender/AFP

Italy held on to the top spot in Europe’s rankings for VAT evasion once again, the European Commission said on Thursday.

The Italian state lost 35.4 billion euros in dodged VAT revenue, marking the biggest loss in absolute terms, according to a new EC study.

The figures, the most recent available, dated from 2018 and so were not impacted by the coronavirus pandemic.

Lost tax revenue in Italy was up from 35.3 billion euros in 2017.

The United Kingdom was in second place with a loss worth €23.5 billion, followed by Germany with €22 billion.

As a percentage, Italy’s tax gap was fourth-biggest at just over 24 percent, behind Romania (33.8%), Greece (30.1%) and Lithuania (25.9%).

“Today's figures show that efforts to shut down opportunities for VAT fraud and evasion have been making gradual progress – but also that much more work is needed,” commented Paolo Gentiloni, EC Commissioner for Economy.

“At this time more than ever, EU countries simply cannot afford such losses,” he said, urging countries to “step up the fight against VAT fraud with renewed determination.”

READ ALSO: Could coronavirus push Italy to adopt card payments at last?

Prime Minister Giuseppe Conte is looking at introducing measures encouraging electronic payments as part of his Progetto Italia Cashless, or Project Cashless Italy. 

Following the meetings on Tuesday, Conte spoke of the “importance for the country of encouraging everyone to use digital payments.”
 
“It will not only mean making the payment system more efficient, more transparent and traceable: it also means laying the foundations for recovering the underground economy, discouraging payments 'in the black'.”
 
Some studies estimate that up to 86 percent of all point-of-sale payments made in Italy in 2018 were in cash – the third-highest in Europe after Spain and Greece, where the figure is 87 and 88 percent respectively.
 
This compares to just 15 percent in Sweden and 34 percent in the UK. 
 
Photo: AFP
 
Several measures encouraging cashless payments were included in the 2020 budget last November, including the promise of tax incentives for those who pay by electronic – and therefore traceable – means, as authorities try to tackle widespread tax evasion.
 
The government also stated it would slash the maximum cash payment allowed from the current 3,000 euros down to 1,000 euros by 2022.
 
Italy has long been relatively resistant to adopting forms of cashless payment. But ministers may now be hoping that the public is more open to switching to electronic payments – either due to hygiene concerns, or after shopping online for the first time during lockdown.
 
As elsewhere in the world, some Italian shops and businesses had already taken it upon themselves to start asking customers to use contactless payments to avoid handling bills possibly touched by an infected person.
 
This includes payment via apps in some restaurants, as well as requests for customers in shops to use contactless payment methods.
 

 

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MONEY

How much does it cost to raise a child in Italy?

How big is the financial commitment parents have to make in Italy to pay for their offspring’s needs and expenses until they’re grown up and independent? Here's a look at the predicted costs.

How much does it cost to raise a child in Italy?

Family is the bedrock of Italian society, but it’s also an unbalanced economic crutch, propping up children who leave home much later than most of their European counterparts.

Various factors are at play, from a declining birth rate, youth unemployment, being unable to get on the property ladder to young Italians moving abroad in search of better financial opportunities.

It probably comes as little shock, then, that parents in Italy end up forking out huge sums of cash to support their offspring through childhood and early adulthood (and beyond).

Even just up to the age of 18, raising a child in Italy can cost upwards of €320,000, according to data from Italian consumer research body ONF (Osservatorio Nazionale Federconsumatori).

The average spend of raising a child from 0-18 years is €175,642, but it rises in families with high incomes, classed as over €70,000 per year.

READ ALSO: Italian class sizes set to shrink as population falls further

Researchers noted that the cost of bringing up children has jumped up following the effects of the pandemic too: compared to 2018, child-rearing expenses increased by 1.2 percent by 2020.

The decrease in expenditure related to transport due to spending more time at home, as well as those incurred for sports and leisure activities, was not enough to mitigate the increase in costs for housing and utilities, which increased by 12 percent compared to 2018.

Photo by Suzanne Emily O’Connor on Unsplash

Food prices rose by 8 percent compared to 2018 and education and care jumped by 6 percent for the same timeframe.

In fact, Italy ranks as the third most expensive country in the world for raising children, only coming behind South Korea and China, according to data from investment bank JEF.

The pandemic has contributed to extending an already growing phenomenon: the decrease in annual income of Italian households.

Household income dropped by 2.8 percent from 2019 to 2020, the report found, citing data from national statistics agency Istat. It marks a further squeeze for families, especially low-income and single-parent families.

Depending on earnings, the amount needed to bring up a child until the age of 18 varies considerably.

READ ALSO: ‘Kids are adored here’: What being a parent in Italy is really like

A two-parent family with an annual income of €22,500 spends an average of €118,234.15 to bring up a child until the age of 18; for the same type of family but with an average income of €34,000 per year, the total expenditure to bring up a child increases to €175,642.72.

For high-income families, stated as over €70,000 annually, raising a child costs €321,617.36 on average.

The figures mark an increase of around €5,000 for low- and middle-income families, and a much sharper rise of €50,000 for high-income families, compared to ten years ago.

The money gets spent on housing, food, clothing, health, education and ‘other’ categories. The report revealed that the average spend on a child aged 16 years old is almost €11,500 annually, amounting to €955.78 per month.

Almost €2,000 per year gets spent on food, €1,615 goes on transport and communication, €782 goes on clothing and €1,600 goes on education annually, the report found.

They begin small, yet the costs are anything but. (Photo by LOIC VENANCE / AFP)

For the ONF, “these data highlight how, today more than ever, having a child is becoming a luxury reserved for the few, which fewer and fewer Italians are able to afford.”

READ ALSO:

The numbers on supporting children after their 18th birthday are a little hazier, as when children eventually fly the nest varies – but figures from Eurostat show that Italy ranks third in Europe for the average oldest age at which children move out of the parental home, at 30.2 years old.

Only young people from Croatia and Slovakia wait longer to live independently, while the EU average for flying the nest is 26.4 years old.

Even then after eventually leaving home at over 30 years old, it’s not entirely clear how many Italians are fully independent once they get their own address, or whether their parents continue to bankroll their living costs.

Italy’s president Sergio Mattarella sent a message to Italy’s Birth Foundation (Fondazione per la Natalità) in May stating, “The demographic structure of the country suffers from serious imbalances that significantly affect the development of our society.”

In response to worsening economic circumstances, the Italian government has recently pledged to do more to help people have families and reverse Italy’s continuing declining birth rate.

It has introduced the Single Universal Allowance (L’assegno unico e universale), but along with it has dropped various so-called ‘baby bonuses’ that provided lump sums to new parents.

The new allowance is a monthly means-tested benefit for those who have children, or are about to have a child. It is payable from the seventh month of pregnancy until the child reaches the age of 18 or in some cases, 21. For more information on what it is and how to claim it, see here.

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