ICI (Imposta Comunale sugli Immobili) was created in 1992 as a local property tax, the income of which went partly to the State and partly to municipalities budget. From the outset, exemptions were allowed based on the social relevance of activities carried on in relevant buildings. Educational, charity and religious activities were allocated State support. As far as Catholic owners were concerned, a fundamental distinction applied dating back to 1984. At the time of the revision of the 1929 Concordat, the agreement of 1984 (acts 121 and 206/222 of 1985), allowed ecclesiastical entities to carry on commercial activities, though these were not eligible for tax exemptions. Since 1992, with ICI, the same was meant to apply to properties through which relevant activities were carried out.
Although the principle was clear, its application was problematic. Did a small chapel in a hotel transform that hotel in a religious facility, thus allowing the religious owner not to pay ICI on the whole building? Could a bookshop run by a monastery in a separate building be considered instrumental to the subsistence of the monastic community and therefore could be exempted from ICI?
Two factors contributed to an abusive interpretation of the law: firstly, the typically Italian indulgence for tax evasion and tax avoidance and secondly, the protection of Catholic institutions granted by the Concordat and by Italian law, seldom allowing for effective scrutiny. Widespread respect for the contribution of the Church to the social welfare was also a key factor. Since everybody cheats, the discourse went, why should we put pressure on the Church? After all, this is not about stealing from private citizens, but about stealing from the State, something that everybody has always been content doing.
Since his electoral breakthrough in 1994, Silvio Berlusconi embodied Italian tax-loathing. ‘Less taxes for all’ was the magic promise the majority of Italians believed when voting for Berlusconi in 2001 and again in 2008. Under the tycoon’s vision of Italy as a rule-free country, it became highly unpopular to remind that exorbitant taxation is the price paid for exorbitant tax evasion. Cheering crowds applauded the Cavaliere’s endorsement of tax evasion: a State compelling citizens to pay taxes is a Communist State, a State stealing from its ‘subjects.’ Neo-liberalism offered the rationale and language to translate a primitive call into a sophisticated and dignified project.
Under the slogan ‘more society, less State,’ the pro Berlusconi Catholic conservatives of Comunione e Liberazione adopted the expedient strategy of exploiting the Catholic social doctrine to legitimise corrupt politics. The emphasis on subsidiarity fuelled the opaque transfer of resources from the State to private budgets, often Catholic social corporates. Few Catholic voices rose in vain, easily stigmatised as leftist and statist, and blamed for being out of touch with the Italian ambition to reconcile post-modern consumerism and social conservatism. Reform of ICI regulations in 2005 encapsulated the new Italian deal. The distinction between commercial activities and religious, educational or charity activities was cancelled. Even a loose connection to the religious nature of the relevant institution was enough for the property to be exempted from ICI, regardless of its use for commercial purposes.
In the same months Cardinal Ruini, the President of the Italian Catholic bishops, urged Italian Catholics to abstain from voting in a referendum challenging Berlusconi’s conservative act on assisted reproduction. With a lack of quorum the referendum failed, allowing the Bishops to appropriate the low turnover rates and to claim the Church was back as an influential political actor. One year later, in 2006, the newly elected centre-left government led by Romano Prodi endeavoured to tighten the ICI regulations. According to the new discipline, activities run by religious, educational or charity entities were still exempted, with such exemption withdrawn from activities that were ‘exclusively commercial in nature,’ irrespective of their connection to an ecclesiastical entity.
In actuality, the new norms proved immaterial, owing to clever manoeuvring by Church officials and to the governmental failures in closing loopholes. With the development of a piecemeal law on non-profit organizations, the legal framework grew so complicated, ambiguous and inaccessible that even experts found it almost impossible to deduce a clear picture. According to a well-established Italian habit, the inextricable forest of legal technicalities served the interests of the smart and savvy. In the meantime, Prodi’s attempt to introduce an act allowing at least for heterosexual civil partnerships, crashed against the harsh opposition by the Catholic Bishops. The way was paved for the infamous “Family Day” of 2007, when Berlusconi, in Rome, triumphantly championed the rights of the traditional family allegedly threatened by European secularists.
After the new electoral victory of Berlusconi in 2008, no further steps were made to clarify the situation. In yet another blow to the public budget, the Prime Minister ceased applying ICI to main residence houses (‘prime case’) and continued using the financial leverage to please the Catholic Church. Church representatives argued that ICI regulations had been introduced in 2006 by a centre-left coalition to discharge themselves from accusations of collusion with Berlusconi. They felt victimized by a hostile media and emphasized the crucial social role played by Catholic agencies.
In an investigation for the leftist daily newspaper La Repubblica, journalist Curzio Maltese exposed the huge, and ever increasing amount of money paid by the Italian State to the Catholic Church through several budgetary channels, including the exemption from ICI. The articles were ultimately published in a book (C. Maltese, La Questua, Feltrinelli 2008), which accurately exposed the dramatic reality of financial and political do ut des between post 1989 politicians and the Church, although failing to explain why Italians still trusted the Church more than the State (I expressed my criticism in M. Ventura, ‘Per Maltese e la sinistra la Chiesa è solo questua’, in Corriere della Sera, 19 July 2008). Nevertheless, the successful sales figures of the book bore witness to the uneasiness of a growing sector of public opinion regarding the State’s financial support to the Catholic Church in general and the ICI affair in particular. Scandals linking Vatican properties to political corruption only increased tensions.
With the Italian Parliament unwilling to reverse the Constitutional Court dismissal of an appeal against the system of ICI exemptions in 2007, opponents resorted to Europe. The Radical Party, a traditionally anti-clerical formation, asked the European Union Commission to open a procedure for infraction against Italy, on the grounds that the system of exemptions form ICI amounted to illegitimate State aid.
The credit crunch and the debt crisis of 2012 triggered a process leading to the fall of Berlusconi and opening a new political phase. In a spectacular shift, indulgence towards tax evasion turned into public blame for the enemies of the common good. Rigorous State’s scrutiny was now seen as a necessity. The government led by Mario Monti begun its offensive against tax evasion. ICI was replaced by the equivalent IMU (Imposta Municipale Unitaria), which will apply to all properties, including main residence houses. Pensions were cut and taxes were dramatically raised. As a result, public pressure on Church exemptions increased.
Church representatives strenuously defended the past, but could not avoid conceding that the legal framework needed further clarification. It was for the government to take the lead in drafting a comprehensive and clear legal framework for non-profit organizations in general, and tax exemptions particularly. However, as far as the ecclesiastical properties were concerned, this could not have been achieved without the cooperation of national and local Church officials (this was my position in M. Ventura, ‘Contribuente, stato e religioni. Adesso sull’ICI serve un nuovo patto’, in Corriere della Sera, 11 December 2011). Against this background, the Monti government has drafted an amendment to the decree law of 24 January 2012, the main legislation ‘enhancing concurrency, development and competitiveness’ in the new course of the Italian economy.
Article 91-bis provides that in case of mixed commercial and non-profit use of the same building owned by an ecclesiastical entity, IMU will be owed for the portion of the property in which commercial activities take place. If introduced, the amendment will be a step forward, but would not untie the knot. Serious application of the law will depend on the true will of State agencies to further clarify the principle (the last ministerial circolare of 2009 is a masterpiece of ambiguities), while implementing an effective system of control. If truly interested in discouraging abuse, the Bishops’ conference will also be responsible of drafting guidelines harmonizing fiscal compliance in different areas of the country.
The ICI/IMU affair is not just about public and private money. It encapsulates a whole Italian tradition of ruse and do ut des. Without broader change in the mind sets of both Church and State, the announced measure will probably appease the public opinion and stop the procedure of infraction in Brussels, but would not address the real issue. A new balance between the role of the State and the prerogatives of Catholic agencies in civil society will only be possible if both State and Church representatives abandon legal ambiguities and embrace transparency and accountability.
Marco Ventura (University of Siena).