September 23, 2009 / 10:20 AM / 10 years ago

Berlusconi government under fire over fraud amnesty plan

ROME (Reuters) - Italy’s opposition and the largest union attacked Prime Minister Silvio Berlusconi’s government on Wednesday over an amnesty that would wipe the slate clean on offences including accounting fraud for money hidden abroad.

Italy's Prime Minister Silvio Berlusconi arrives at an informal summit of European Union heads of state and government in Brussels September 17, 2009. REUTERS/Yves Herman

“This is a disgrace to honest people and an incentive to tax evaders. The message is: don’t you see it pays not to pay taxes,” said Concita De Gregorio, editor of L’Unita, the newspaper of Italy’s largest opposition party.

Other centrist and leftist commentators also ripped into the Berlusconi government over the proposed amnesty, with the far-left Manifesto newspaper calling it “the amnesty of shame.”

“Shameful,” centrist Senator Gianpiero D’Alia told the Senate, “With this, Mafiosi and terrorists can repatriate illegally gained capital without any control by the state.”

The controversy flared after a senate committee on Tuesday approved extending the scope of the proposed amnesty to include money kept hidden abroad through accounting fraud. The amendment was approved by the full senate on Wednesday, prompting a walkout by the opposition.

Berlusconi’s center-right government in August approved Italy’s third tax amnesty in nine years, in a bid to boost government revenues during the downturn by bringing back into the economy billions of euros held abroad by Italians.

That follows similar efforts by other nations such as the United States, which is offering an amnesty program for wealthy people declaring offshore income, and France, which is allowing people to make voluntary disclosures to quietly come clean.

The latest amendment allows Italians to wipe the slate clean on undeclared funds hidden abroad by paying a 5 percent penalty.

The entire package must be approved by the full senate and lower house. The government has defended the plan, saying it is better to have capital at work in Italy rather than hidden abroad and that in future all undeclared money abroad will be considered the fruit of tax evasion.

UNION OUTRAGED

“This is the stuff of rascals,” said Guglielmo Epifani, head of Italy’s largest trade union, the CGIL.

While cases under probe by tax authorities before a 2009 cut-off date that parliament has yet to decide would not benefit, economists say these are a minority compared to the number of Italians with money abroad who have not been audited.

Bank sources estimate that Italians have about 600 billion euros in foreign tax havens and bankers have said this year’s amnesty could bring back more than the 80 billion euros repatriated under two previous amnesties.

Under the amnesty, individuals or companies with undeclared money abroad would be able to either repatriate it or keep it abroad and regularize it by paying a fine of 5 percent of the undeclared capital.

“This is nothing less than a gift to the white-collar class and an insult to the principles of ethics and fairness,” said Giuliano Barbolini, a parliamentarian of the opposition Democratic Party.

Even some centrist politicians who had reluctantly approved the original version of the tax amnesty on the grounds that it would help the economy at a time of crisis, opposed the false accounting provision.

Pier Ferdinando Casini, a former Berlusconi ally who heads the centrist UDC party said the amendment was unacceptable. “We have always made speeches about the need for ethics in the economy and what do we do now, just erase all that?.”

Economists have said the amnesty should reap a welcome cash injection during Italy’s worst post-war economic slump, but have warned it risks encouraging tax evasion over the long term.

Italian Economy Minister Giulio Tremonti last year had vowed not to resort to amnesties again before approving one this year.

Under the current provisions of the plan Italians would have until December 15 to take advantage of the amnesty after it is approved by parliament and Italy’s president.

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