Stupid, stupid, stupid. The Laffer curve is proven once again. This time by Italy.
Italy has a tax evasion problem. You have the ultra rich claiming no income and hanging out in luxury. Well, Italy is in some serious financial difficulties. The obvious knee-jerk solution is to go after those evil rich people! And, Italy did.
Italian Prime Minister Mario Monti has ordered a crackdown on yacht owners who claim low or no income, The Telegraph reports (h/t The Daily Mail). Monti’s government has also instituted [up to] a 700 euro per-day tax on large yachts in Italian harbors.
This is after they went after the rich in the upmarket ski-resorts in the Alps and the Dolomites. Prime Minister Monti has also initiated a crackdown on tax-dodging luxury car owners as well, Reuters reports.
So, what happened?
The unwelcome attention has led many yacht owners to flee Italy’s marinas for friendlier foreign ports, from Corsica and the Cote d’Azur in the west to Croatia, Slovenia, Montenegro and Greece in the east.
Others are heading southwards, to Malta and Tunisia – where they can access their boats on low-cost budget flights from Italy for a fraction of the tax bill they might otherwise face.
Around 30,000 yachts have fled Italy this year, costing €200 million in lost revenue from mooring fees, port services and fuel sales, according to Assomarinas, the Italian Association of Marinas.
The downturn in the industry, coupled with Europe’s recession, has cast a dark cloud over the 18,000 new yacht berths now under construction around Italy. Plans for a further 30,000 new berths have been put on hold.
“People don’t know what the implications are for big yachts so they’re choosing not to go to Italy or keep their boats there,” said Cecile Gauert, editor-in-chief of the US-based Yachts International Magazine. “Boat owners will simply sail to the next friendly harbour if there’s something they don’t like.”
There was also a 50 percent and 70 percent slump in Ferrari and Maserati sales, respectively, during the first quarter of the 2012 fiscal year.
Soaking the rich….. this causes the wealth to leave. Worse, we see a drop in revenue. Worse yet, we see a cost in jobs. The 30,000 new berths won’t be constructed. The cars? They won’t be produced. The jobs? They are as gone as the 30,000 yachts. Now, one has to ask
Can this be instructive to other nations?