Rome

Underground economy costs Italy competitiveness, says Letta

'Distorts competition, creates inefficiency' argues premier

Underground economy costs Italy competitiveness, says Letta

Rome, July 24 - Italian Premier Enrico Letta said Wednesday that Italy was losing competitive because of its large underground economy. ''If we ask ourselves why Italy is not very competitive, I reply that it is because the underground economy is so significant'', Letta said during a visit to the Italian inland revenue agency. ''It distorts competition and creates inefficiency''. He also said that "taxes are too high in our country because not everyone pays them". The premier vowed his government would fight ''to recuperate resources (from evaders) wherever they are, in Switzerland or tax havens''. He warned tax dodgers holding capital abroad that international agreements meant the "climate is changing". He added that it was best for them "to bring back their money to Italy because the international situation does not enable them to have the coverage they've had up to now". Italy has the world's second-largest underground economy in proportion to gross domestic product after Greece in international rankings, the president of the national Audit Court Luigi Giampaolino said last month. The size of the economy outside the legal tax system is reportedly estimated at up to 18% of national GDP. Unpaid taxes including VAT meant that as much as 50 billion euros escaped the taxman in 2011, Giampaolino said.

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