Italy tax amnesty yielded 95 billion euros – ministry
By Daniel Flynn
ROME, Dec 29 (Reuters) – Italians have declared 95 billion euros ($136.7 billion) held illegally overseas under a tax amnesty, topping original government forecasts and providing a boost to Italy’s banking system.
The Finance Ministry said in a statement on Tuesday around 98 percent of the money declared under the amnesty had been repatriated to Italy. Analysts estimate repatriated funds have flowed mainly into small- and medium-sized banks.
The amnesty, which expired on Dec. 15 and led to tensions with neighbouring Switzerland, allowed Italians to declare illegally held assets, paying a one-off tax of 5 percent.
The ministry said in a statement a prolongation of the amnesty until end-April, approved by the cabinet this month, would be the one and only extension. Government sources say they expect this to reap a further 30 billion euros.
“The time of tax havens has finished forever,” said the ministry statement. “To place or keep money in tax havens is no longer convenient, neither in economic nor tax terms. The returns are small, the risk is high.”
The amnesty sparked a spat with Switzerland after Rome placed it on a blacklist of countries not cooperating with the amnesty. Switzerland summoned the Italian ambassador in October to demand an explanation of raids by police and tax inspectors on dozens of Swiss banks in Italy.
The ministry statement said members of the G20 group of rich and developing nations were determined to impose new and more effective rules against tax evasion.
The amnesty provides Prime Minister Silvio Berlusconi’s government with a tax windfall of 5 billion euros — well in excess of the 3.7 billion originally budgeted by the government.
Much of the money has been earmarked for the 2010 budget to finance additional welfare spending and the police, as well as fiscal incentives to encourage research and help small businesses as Italy strives to consolidate an economic recovery.
Italy’s 1.5 trillion euro economy returned to growth in the third quarter, expanding 0.6 percent, after five consecutive quarters of contraction, its worst post-war recession. The government forecasts growth of 0.7 percent in 2010.
Analysts say small institutions appear to have benefited more from repatriated funds, with Italy’s four biggest banks collecting less than a quarter of the estimated total.
Italy’s biggest retail bank, Intesa Sanpaolo, estimates the capital it has attracted under the amnesty to be 10 billion euros. Estimates for the funds handled by UniCredit, Intesa’s nearest domestic rival, are around 4.5 billion euros, sector sources say.
Italian banks have weathered the credit crunch better than European rivals due to relatively low levels of household debt.
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