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As the indebted Eurozone nation Italy struggles to stay afloat, the country finds many of its wealthier citizens evading taxes and refusing to do their part.
As a result, Italy’s Polizia launched a major operation across Milan in late January, setting roadblocks to halt high-end luxury vehicle drivers. When drivers hand over license and registration, their personal information will be passed on to the national tax agency to determine whether the owner of the car has declared accurate income and if the proper amount of income taxes has been paid.
Targeting tax evaders by profiling luxury vehicles is nothing new. A year ago, Italian authorities applied the same logic to luxury yacht owners in Italy’s harbors.
So far, traffic checkpoints sweeping for tax evaders have been posted in locations including one right across the street from Milan’s famed Corso Como, another at the Cortina d’Ampezzo luxury ski resort, the Italian Riviera’s Portofino, and cities Rome and Florence.
A wealthy entrepreneur of Italy, Andrea refused to give his last name to prevent giving off any further attention to Italy’s tax agency. When asked about his Land-Rover Range Rover, Andrea said, “I’ve been stopped three times in the last few weeks by authorities because I’m driving a luxury SUV. It seems like McCarthy era in America. You’re guilty by suspicion.” Due to excessive harassment from the police, Andrea plans to sell the Range Rover he bought last May. Expecting to receive 40,000 euros at best for a car he bought for more than 100,000 euros, Andrea explains, “Dealers are full of luxury cars. No one wants to buy them now.”
Not only are luxury car owners targeted on the street day to day, but luxury goods tax hikes discouraged premium car ownership as well. An owner of a 316,000 euro Lamborghini Aventador would now have to pay about 8,400 euros in taxes a year for the Italian exotic, an amount that’s almost 500 percent higher than tax charges from the past.
General Manager of Jaguar Italy Marco Santucci said that orders for Jaguar vehicles have “decreased substantially” in the final months of 2011. Demand for the Italian Icons Ferrari, Maserati and Lamborghini have nosedived by 53 percent in January. Maserati CEO Harald Wester expresses his disappointment, “It’s hard to imagine that any other European country having luxury car producers contributing significantly to employment would have introduced a tax.” On the other hand, Ferrari and owner Fiat are less perturbed. Fiat CEO Sergio Marchionne commented that “Italy isn’t a concern for Ferrari as it sells its cars abroad.”
According to ANFIA (Associazione Nazionale Fra Industrie Automobilistiche), the association of Italian automakers, January only netted 66 supercars sold. Italian dealer association Federauto added that new taxes and general national prejudice caused prices for exotic cars to fall by 20 percent. Head of Federatuo Filippo Pavan Bernacchi said, “Extra taxes and fiscal raids are hurting the demand for supercars and killing the second-hand market.”
Despite the displeasure of its citizens, Italy’s raids are working. At the Cortina d’Ampezzo ski resort, 251 luxury vehicles were stopped, including Ferari and Lamborghini supercars. Of the lot, 42 luxury car owners had declared an income of 30,000 euros or less for 2010 and 2009. What’s more 19 luxury vehicles belonged to businesses that posted a loss in the previous year. In Florence, a builder was discovered to have no tax record at all, while his wife received social assistance.
Tax evasion is estimated to cost Italy about 120 billion euros in lost revenues each year and it is unclear whether stopping luxury car owners at checkpoints could really fix Italy’s debt. However, our wealthy readers should note the 20 percent price drop in Italy’s premium car market. Not only is there a bargain to be found, but customers will be lending a hand to Italy’s local business.
Mark Pieloch, a Lincoln, Nebraska resident and avid car collector, is facing tax evasion charges in the state for not paying duties on roughly 100 special interest cars he purchased. After a six-month investigation into the matter, local police issued a warrant for Pieloch’s arrest.
Investigators in the case stated that out of Pieloch’s collection of cars, some have Nebraska titles, some have South Dakota titles. When you purchase a vehicle in South Dakota, you are not required to pay sales tax on it, however if a vehicle is stored on property in the state of Nebraska, tax must be paid on the purchase price.
According to an informant in the case; Pieloch “went out of his way to evade paying taxes,” and although claims he lives in a small house Sioux City, SD, authorities maintain his main residence is a large property, located in Lincoln, NE. That same informant also told investigators he’d seen Pieloch driving around in various different vehicles with SD plates, including a Hummer, Corvette and Chevy Avalanche. Sales tax evasion is a Class IV felony, punishable by up to five years in prison.
[Photo Credit: Mustang Car Club of Ohama]