Analysis. The Italian government celebrated the €300 million tax settlement with Google, but the case highlights the continuing attempts of multinationals to dodge taxes.

Google settles, but tax evasion continues

The Gentiloni government, represented by the Economy Minister Pier Carlo Padoan, is committed to fighting tax evasion and making multinationals pay taxes. This was echoed by the director of the Italian Internal Revenue Service, Rossella Orlandi, who has indicated that the agreement signed Thursday with Google is the way forward for the other online major players (the best known names are Facebook and Amazon) that came under the spotlight of the judiciary for suspected tax evasion.

Under the agreement, Google will pay to the Treasury more than €300 million, although the figure certified by the Guardia di Finanza [Italian finance police] was much higher. The American company avoided paying Italian taxes for quite a long period, since the first surveys of the financial police date back to 2005.

This is the second case of multinationals settling with the government to avoid ending up in court. Apple made a similar agreement under the Renzi government. According to the Italian tax authorities, the companies were doing business in Italy but registered that revenue at their Irish subsidiaries, where most multinational companies benefit from a tax framework designed to attract investment.

The system was tested so many times that even the European Union intervened. It has repeatedly denounced the scandal of a generalized “tax evasion.” This scandal is now unacceptable, especially on a continent that set austerity as its guiding principle for economic and social policy. In reality, tax breaks for companies have also guided national policies. Neoliberalism can continue to be the dominant rule, provided, as Brussels has stated several times, that a little tax is paid on the huge profits multinationals enjoy.

Thursday’s agreement can certainly be presented as a success, but it nevertheless recorded the postponement of European decision on tax legislation shared by all E.U. countries.

Beyond the triumphalist tone of the government, the executive branch wants to normalize the 2013 (but later suspended) webtax for those who do business on the internet. According to the regulation, these taxes would be used to finance projects to combat poverty, unemployment and to replenish the increasingly laughable funding for social services.

According to Francesco Boccia, Chairman of the Budget Committee of the House, and one of the authors of the webtax regulation, the next step is to bring the issue to all international institutions. Minister Padoan announced this possibility: He said he would request to include in the agenda of the next G7 meeting in Bari the need to establish procedures to introduce a webtax in the legislation of the most industrialized countries on the planet.

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