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"Supercar" Sales Die as Italian Cops Nab Tax Cheats

Monday, 23 Apr 2012 | 12:13 PM ET
Source: Alejandro Rodriguez | Gooding & Company

The only thing Italian sports car salesmen have to fear is fear of the taxman.

Ferrari dealers in Italy are seeing a 50 percent drop in sales, and their colleagues at Maserati are reporting a 70 percent falloff in the first quarter compared to the same period last year, according to a Reuters report. The collapse is due to a crackdown by the Italian government’s T-men—the Guardia di Finanza, or tax police, on luxury car owners.

Before Christmas last year, officers cruised the parking lots of the Cortina d’Ampezzo, a posh ski resort in the Dolomites, checking license plates on pricey cars and running the tag numbers through tax-authority computers.

Of the 150 vehicles checked out, the tax-enforcement squad found 60 whose owners had reported income of less than 40,000 euros a year—or slightly more than $52,000.

“It’s highly unlikely that someone making 40,000 euros per year could afford a Ferrari,” the Motor Authority website points out, “let alone its care and feeding.” The site reports that one Mercedes was attached to a couple that had no presence in the treasury’s data banks at all. The wife was receiving public assistance.

The crackdown has continued this year, with checkpoints set up near Milan’s shopping district along the Corso Como and in fashionable areas of Rome and Florence, prompting the chairman of the country’s car-dealers association to accuse the government of “terrorizing” its citizens.

Indeed, the revenue crusade has provoked a mad sell-off of vehicles by panicked, presumably tax-dodging owners that has reduced prices for used Maseratis, Lamborghinis, Ferraris and other luxury cars.

The tax-enforcement effort is part of a broader plan to raise revenues to keep Italy out of the kind of debt default that has threatened Greece, whose problems have been attributed in part to the breakdown of trust—and participation—in the tax system.

The new Italian administration, charged with restoring fiscal order, is leaning heavily on high-end consumers. In addition to unleashing the tax police, the government has raised taxes on luxury goods and on fuel. One estimate predicts that, overall, drivers in Italy will contribute more than $5 billion to the nation's coffers this year.

The supercar crisis comes on the heels of another Guardia di Finanzia raid of auto-body shops that were selling Ferrari knockoffs—Pontiac Fieros with Ferrari bodies bolted to them.

Fiat , which owns Maserati and Ferrari, seems to be taking the bad spell in stride. Sales outside Italy are doing fine, notes chief executive Sergio Marcchioni, and sales in the country were already down—thanks to very austerity measures that have made the government thirst for revenue in the first place.

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  • A reporter and editor, Robert Frank is a leading authority on the American wealthy for CNBC.