I spent the last two weeks travelling around Italy and saw a sign: “Chiuso per Tasse: Vittima del Governo”. This sign is on selected retail stores that were vacant, prompting me to ask for the translation and explanation. Translated, this sign means “Closed due to Taxes: A Victim of the Government“.
After investigation, I discovered that Italian businesses and the general population is struggling under the Eurozone austerity rules. Some villages have lost over 50% of their businesses during the last 3 years including manufacturing, food production and retail outlets. The remaining businesses have dropped their workforce numbers just to remain in business. All businesses I spoke to expressed dismay at the rate of tax increases. These are some of the examples shown.
One door handle manufacturer decreased their workforce to 30 full time employees from 83 two years ago. This business remains in survival mode, slashing costs each time a new tax increase hits.
Restaurant business owners that I met all expressed dismay at the 15 – 50% increase in taxes, wondering if they can still survive for another year. The increasing costs comes generally from electricity, heating fuel, and waste removal. An example is the monthly waste removal which increased from €400 to €800. Many have already closed, unless family members can help work for minimal wages.
Other than government employees that appear to be on a special package and remuneration, the general population are severely restricted with wages. Austerity measures imposed by the European Central Bank have increased all taxes, hurting the lives of everyday people. The average wage of €17,000 per year ($24,200 AUD) is transformed to a net of (after all fees, and taxes) approximately €8,000 ($11,400 AUD). This equates to approximately 55% personal income tax and fees.
Maria (a local) explained about her family’s situation. Maria earns €1,250 net income (after tax) with a €900 monthly mortgage payments. The family lives on €350 per month plus Angelo’s (her husband) part time income of up to €1,000 per month. They only just get through the monthly expenses.
Now the general population has become vocal by criticizing the Italian Government and Germany’s control of the Euro. A simple example is the heating fuel called ‘Pellets’ that is used to fuel the stove that heats the average Italian home. The government encouraged average home owners to install the pellet heaters as an economical heating fuel. This made sense so hundreds of thousands of families spent €8,000 installing the heaters. Fuel cost in 2012 was just €1 for a 5.5 Kg bag. Just 3 years later, the same bags of pellets cost € 5.50 as the fuel cost increases as well as taxes and duties. An announcement was made for another tax increase due to a special VAT rate of 22%. This is not a luxury item like a car or perfume, but a necessity for heating a home in the snow covered houses. Home tax, land tax and car registrations are all increasing to return money to the government.