Super Monti ‘s fight against fiscal laxity

Source: Nicole Kirbach¸ PKF Malta

As published in the Malta Today on the 10th October 2012

Several corruption scandals are currently creating a stir in Italy¸ where its citizens have in the course of austerity measures are expected to pay even higher taxes in order to reduce the country’s debt. The latest scandal concerns the Italian flagship entrepreneur Giuseppe Saggese. His firm collected the taxes for hundreds of communities. But it’s books did not tally and upon closer examination by the authorities it  was starkly evident that a black hole shows kickbacks of  100 million Euros. By contrast Malta was shocked three years ago when the media revealed the story of 31 taxpayers charged over €10 million vat department fraud with six VAT employees arraigned¸ and two facing drug charges.

Police investigators from the Economic Crimes Unit (ECU) presented writs of summons in Court against 31 persons¸ including two women¸ in connection with the alleged multi million euro VAT Department fraud.

The shocking revelation was that nobody suspected that with all the checks and balances reigning at the Vat department such a leak could go undetected given the draconian measures and anti- abuse clauses embedded in the law. More stunning was that six of the accused are VAT Department employees¸ while the rest were company directors¸ accountants and criminals who reportedly operated as intermediaries between companies in default and the VAT Department. The latest annual report by the National Auditor suggests that some €1.1 billion in income tax¸ VAT and other taxes and various licence fees remain uncollected by the respective government departments. This alone is an indictment on the operations of the respective authorities – but the hidden aspect to this fact is how much of this uncollected sum is compromised by corrupt practices. With hindsight ¸it begs the question how easy was it for such low fiscal morality to fester in Malta possibly endangering the public coffers and darkening the reputation of national bureaucracy ( the latter recently awarded a euro 60 m salary raise)? Certainly this is dwarfed by the gargantuan misappropriations discovered in our neighbouring  country to the north.

Back to Italy ¸ Saggese was one of Italy’s flagship entrepreneur and a pioneer of private tax collection. In the 80s¸ Giuseppe Saggese founded the first private company that started the novel idea of promoting efficiency in the collection from municipalities of state taxes. Initially he started in his drive to collect fees for erecting billboards¸ then waste collection fees¸ property taxes¸ and finally regional taxes.Saggese has collected such taxes with the help of its subsidiaries employing a total of 1000 employees. But the horror of the story is that controls were slack and in the process he pocketed taxes so collected and not accounted these for the state-he has not paid to the municipalities. He has simply kept the money for his company consequently the regions have lost more than 100 million Euros in taxes. Saggese is said to have personally embezzled at least 15 million Euros to live a life of pleasure and extreme luxury.

With the taxes¸ he financed his cars – Mercedes