MILAN — Lay low.
This story first appeared in the May 5, 2008 issue of WWD. Subscribe Today.
That was the general strategy among Italian designers and fashion industry executives last week after their 2005 earnings, taxes paid and other personal data were among those posted by the outgoing Italian government on the Web site of the national tax agency. The government posted the data for a few hours Wednesday morning for every citizen of Italy.
Many designers declined to comment on the move, or else couldn’t be reached for comment because of the long weekend related to the May 1 national holiday.
According to the leaked information, Giorgio Armani topped the list of Italian taxpayers with earnings of 45 million euros, or $56 million at average exchange, and income taxes of 19.3 million euros, or $24 million, in 2005.
“I’ve read about the [tax postings], of course, but I was on vacation so I didn’t think about it that much,” said Giorgio Armani on Sunday during a visit to his Fifth Avenue flagship, which is under construction.
Domenico Dolce and Stefano Gabbana didn’t do badly either in 2005, with each earning 29.7 million euros, or $37 million, and paying taxes of nearly 12.8 million euros, or $15.9 million. Actually, Dolce earned 56,986 euros, or $70,970, more and paid 26,945 euros, or $33,557, more in taxes than his business partner. That said, those figures could yet be revised. Dolce and Gabbana’s company is being investigated by the tax agency for allegedly not declaring earnings of around 260 million euros between 2004 and 2006. Neither designer is believed to have been named so far in the probe.
Other designer numbers revealed last week included those of Miuccia Prada, who took home 5.1 million euros, or $6.4 million, and paid 2.2 million euros, or $2.7 million, in taxes in 2005; Donatella Versace, who earned 2.2 million euros, or $2.7 million, and paid taxes of 922,063 euros, or $1.1 million, and Luciano Benetton, who pocketed 1.6 million euros, or $1.9 million, and paid 694,750 euros, or $865,235, in taxes.
Italy is still abuzz over the release of the information. The country’s privacy watchdog forced the tax agency to suspend the site shortly after it went live, but not before the information had been uploaded onto peer-to-peer file-sharing networks and disseminated in blogs.
Former tax minister Vincenzo Visco, who authorized the posting, defended his decision as being in the interests of transparency and democracy and underlined the information had always been available to any citizen if requested in person at the national or local tax offices.
Consumer groups branded it a violation of laws guaranteeing privacy and a threat to personal security, and offered citizens help in seeking damages from the tax agency.
“It’s absurd,” said Ferruccio Ferragamo, chairman of Ferragamo SpA. “With all the problems Italy has, this just seems like another ridiculous political move that helps no one and, in many cases, doesn’t even reflect people’s real income. It also poses a security issue and isn’t even a lesson for tax evaders. I hope that whomever is responsible pays.”
“To publish this kind of data on the Internet is to me completely wrong,” said Francesco Trapani, chief executive officer of Bulgari SpA. “The society has no advantage, while the more deserving private citizens who pay their taxes, run the risk of being the attention of criminals. Whomever ignored the privacy laws should be severely punished.”
Santo Versace, chairman of the family-owned company, and newly elected member of the Italian Parliament with Silvio Berlusconi’s Popolo della Libertà party said, “My income and that of Gianni and Donatella have always been public, on the newspapers and other media, so it’s nothing new to me. And organized criminal groups already have this kind of information, they don’t need [to go online].
“In any case, I am in favor of complete transparency to fight fiscal evasion, which is a serious social, cultural and penal crime. Everyone must pay their taxes in proportion to their income. I think the American way of dealing with these issues is more effective. That said, we must steer clear of excesses and we must think carefully of ways to treat [transparency]: only income figures should be available, no other personal details.”
The prosecutor’s office in Rome has opened an investigation into the matter, which could lead to criminal charges and up to two years of jail for anyone using the material inappropriately.
Polls by a number of Italy’s leading newspapers showed a country marginally in favor of Visco’s decision, despite many citizens’ low appetite for paying taxes.
Visco was working under the auspices of former premier Romano Prodi, whose coalition government fell apart in late January and who had launched a crackdown on tax evasion. Prodi’s administration claimed last year to have recovered 12 billion euros, or $18.5 billion at current exchange, in unpaid taxes since taking office for the second time in 2006.
The new government of premier and media mogul Silvio Berlusconi assumes full control this week. His last administration passed several tax amnesties.
— With contributions from Alessandra Ilari and Luisa Zargani