Evening star., 1950-11-03
Europe's Soft UnderbeIy-VHI
De GospeH1s MiddIe-Rooders
|Cuuqht Between 2 Mi|Istones

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votes short of similar control of
the Senate. It has committed
itself to tax reform. It has COM
mitted itself to land reform. But,
oh, it moves so slowly.
If Italy is ever to get it's prices
down-as it must to sell many
products competitively in world
markets-and If ever it is to give
its wages the buying power which
builds strong economy by rails
ing real standards of living, it
must repeal its viciouSly regressive
transactions tax" and make pro-
gressive levies against income and
property stick.
Failure to do this fans the
flames of communism. For in
stance, in the feudal Mezzogiorno
region. Communist speakers point
to the meager living eked out by
Sharecroppers - meager because
so large proportion of the crops
are siphoned off by the "barons'
living luxuriously in Rome.
And meanwhile, the transac-
tions tax, which does stick, levies
a varying mountaineering OF
per cent-every time goods change
hands. 1t often piles up to 18
per cent, the experts here say,
before the final consumers pur-
chase.
Income and property taxes, on
the other hand. work out as a
sort of game between the tax
collector and the more prosperous
Italians. Thus. after inspecting
your house and furniture, the
revenue man says your income
must be so many lire. It's high
and he means it to be high. You
howl and swear the figure is, say,
one-tenth. You haggle to a settle
ment. There is no literal declara-
ton OF income, no penalty for
false statement.
Tax Inequities.
The De Gasperi government has
pledged itself to wipe out a situa-
ton in which industrialists pay
taxes on only a fraction of their
earnings: and in which one pro-
vision Of law collects so per cent
from large incomes up to $500 900,
while levying no tax at all on
earnings over that amount.
The Italians are raising in taxes
% per cent Of their national in
come, a dangerously high amount
for a country with low domestic
buying power and high prices
which must export competitively
to survive.
But Italy can scarcely raise less.
1t is still operating on a budget
deficit. though this has been cut
from the fantastic TIC billion lire
of l947-48 to 174 billion in 1e49-
SO. with the prospect Of a slight
further decline In the current
year. (The lira's current dollar
exchange rate is 625 to H. It's
latest available official unemploy-
ment total as 1.s37.o0o. which
does not count the 2 million work.
ers carried on payrolls as super
numeraries because the govern
ment couldn't afford to support
their families on relief.
It obviously should be spending
more. not less. on stimulation of
investment, on housing. even on
the great public works projects
undertaken with the aid of
counterpart" lire-money paid in
by Italians buying imports f.
nanced by American dollars,
which can be used to expand in
vestment and production in any
manner agreed to by the United
States and Italian governments.
At the end of the last fiscal
year, the United States was ready
to turn loose the entire ass billion
lire OF counterpart-but the Ital-
ians had only withdrawn 92.S bill
lion. What Italy needs, to bal
ance both her domestic budget
and her foreign trade balance, the
experts say, IL not higher taxes,
nor lower taxes. but properly
distributed taxes.