Italy: 'Real' taxation rate at 55 percent due to black economy say retailers

Rome, 19 July (AKI) - Italian citizens are shouldering the heaviest 'real' tax burden in the world at 55 percent of earnings amid the highest tax evasion rates of any country, retail association Confcommercio said Thursday.

Italy's black economy amounts to 17.5 percent gross domestic product, driving up the 'real' taxation rate for law-abiding citizens to 55 percent, far higher than the 45.2 percent rate cited by official figures, Confcommercio said in a report.

"This drastically weighs down investment and consumption," said Confcommercio president Carlo Sangalli.

Italy's already high taxes have been raised further by the technocrat administration of premier Mario Monti appointed last November to get Italy's massive public debt under control.

Consumers will spend around 38 billion euros less as a result of value-added tax increases between 2011 and 2014 and gross domestic product per capita will fall back to 1999 levels, Sangalli warned.

Italy's notoriously inefficient justice system, a perception that the quality of public services are is "not worth" the taxes levied on citizens, and bureaucratic tax regulations contribute to widespread evasion, the report concludes.

The president of Italy's Banking Association said last week taxation levels had reached "unsustainable" levels for households in the recession-hit country.

After Italy, Denmark had the second highest real tax burden at 48.6 percent, followed by France (48.2 percent) and Sweden (48 percent), the report said.