Italy deploys computer robot against tax cheats

ROME, Italy - Italians are on edge this week after tax police began deploying a new computer system that compares declared revenues with expenditures to crack down on tax cheats.

The "redditometro" (revenue-metre) will attempt to recover at least a small fraction of the estimated 120 billion euros (S$204 billion) in taxes dodged each year.

It will initially analyse the books over the past four years of a sample 35,000 households, including looking at mortgages, cars and even food purchases.

If it identifies a discrepancy of more than 20 per cent between intakes and outgoings, the "redditometro" immediately triggers a tax inspection.

Italy has one of Europe's biggest grey economies and highest levels of cash transactions, making tax evasion a constant problem despite repeated crackdowns.

The problem is particularly acute in the services sector and police often carry out raids on shopping areas or high-class resorts that reveal massive fraud.

The new system is made up of dozens of computers that analyse databases and "can uncover the big tax evaders and the fake poor," Marco di Capua, the deputy director of the tax agency, told reporters.

The "redditometro" implemented on Monday is a new version of a similar system first introduced in 2010 by then prime minister Silvio Berlusconi, who was himself convicted of tax fraud earlier this month.

It led to the recovery of 116 million euros in 2011 and only 30 million euros in 2012 - a tiny amount compared to estimated levels of rule-breaking.

It has been criticised by some for not going far enough and by others, mainly right-wing politicians, as a massive interference by the state.

Matteo Salvini, a deputy leader of the opposition Northern League party, described it as the type of system "used by communist and fascist regimes".

Prime Minister Enrico Letta has promised to redouble efforts against evasion and said the sums recovered would be used to lower Italy's high tax burden.