Vatican cardinal remarks on tax causes political storm

| Tue, 08/21/2007 - 05:32

An informal remark by Vatican Secretary of State Cardinal Tarcisio Bertone on taxes and the responsibilities of fair government on Monday fuelled a fresh debate over taxes in Italy.

Speaking at a gathering of a Catholic group on Sunday, Bertone said that while every Italian's duty was to pay taxes the government's task was approving fair laws and earmarking funds for the needy.

"We must all do our duty and pay taxes," said the cardinal, who stressed that tax revenues must be used to fund "fair laws and to help the poor and the neediest".

"Politicians must focus on the weak and the poor and make sure that there are no injustices in the distribution of state resources," said Bertone, right-hand man to Pope Benedict XVI.

Bertone's comment came as polemics raged over a call by Northern League party leader Umberto Bossi for a taxpayer's strike against Prodi's government.

The devolutionist League has bandied the idea several times in the past and last week Bossi suggested that Italians pay taxes to their own regions instead of the state.

The League's main aim is to see powers devolved from the State to Italy's 20 regions because it views the affluent north as hampered by the underdeveloped south.

According to League heavyweight Roberto Calderoli, people in the industrialised northern regions are growing increasingly intolerant of the Prodi government which, he says, sees them as "some sort of cow that can be milked non stop".

Centre-left ministers and MPs promptly blasted the League's proposal as subversive and anti-democratic, and opposition allies also distanced themselves from it.

But Bertone's reference to "fair laws" was swiftly picked up by Calderoli on Monday as an indication that the Vatican sided with the centre right's criticism of the Prodi government's tax increases.

Calderoli likened Prodi to "the Sheriff of Nottingham", saying he "treated citizens like serfs and was sucking their blood with all his taxes and levvies".

The League was like Robin Hood, Calderoli said, and its tax strike proposal "is the only arrow" that could strike Prodi's government.

The premier attempted to sidestep polemics, taking a diplomatic approach and saying he "agreed with every word spoken by Cardinal Bertone".

But the centre right hit back, barraging Prodi with a volley of sarcasm and irony.

"I'm very glad Prodi agrees totally with Cardinal Bertone: it obviously indicates he doesn't agree with himself," said Maurizio Lupi, an MP with opposition leader Silvio Berlusconi's Forza Italia party.

"How can Prodi say he agrees with the cardinal if his government raised everyone's taxes and will do so again in its next budget without even thinking of the most needy," said former environment minister Altero Matteoli, of the right-wing National Alliance party.

PRODI HAD ASKED THE CHURCH TO DO ITS BIT.

Prodi was already under fire earlier this month when he said that the Catholic Church should do more to help the State in the fight against tax evasion.

In an interview published by Catholic weekly Famiglia Cristiana Prodi said that when he goes to mass he "almost never hears the priest talk about tax evasion, which is an important moral issue".

The Catholic premier said a third of Italians were major tax dodgers and that "in order to change mentalities, everyone has to do their bit, the schools and the Church included".

"We all have to do our duty as taxpayers so that taxes can come down," added the centre-left premier, who has put up taxes since coming to power 16 months ago in order to tackle a public accounts crisis.

Forza Italia accused the premier of overstepping the line because he was now "ordering the Church around".

Bishop Domenico Calcagno, who was recently appointed one of the Vatican's top financial administrators, agreed that the Church could do more to drive home the message that tax dodging was a "serious sin".

But the archbishop of Chieti, Bruno Forte, said part of the blame lay with the government because it failed to show citizens that their money was being well spent.

Forte, who has strongly condemned tax evasion in the past, said that "there is a widespread feeling that the State is a thief".

"The problem is that people don't think their money is spent well and in a fair way... There's too much waste and too many privileges," he said.

"If at times the Church is cautious on this issue, it's because the tax system doesn't always seem fair," he said.

Berlusconi, a billionaire media magnate, once famously said that high taxes justified tax dodging.

But the government has vowed to put the squeeze on tax cheats, saying that evasion had become a "national epidemic".

According to the tax office, more than 270 billion euros of taxes go unpaid each year - the equivalent of almost 20% of GDP.

For every 100 euros of income tax paid in Italy, 55 euros are evaded, the agency said in a recent report.

Of the country's 40 million taxpayers, 95% claim to earn less than 40,000. A quarter declare an annual income of less than 6,000 euros.

The figures contrast with consumer spending indicators, which show disposable income at significantly higher levels.

The tax office said that honest Italians were the ones who were being penalised, shouldering one of the highest tax burdens in Europe.

It said Italy's official fiscal burden of 41-42% of GDP was far below the "real" figure, which was above 50%.

The government says taxes can only come down if evasion is reduced.

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