Excise duties make a lot of noise, whilst taxes on savings are insidious and silent

Over the last few months, we have been paying close attention to the prices displayed at petrol stations; we compare them with one another and end up noting the differences compared with the previous day’s prices, and we immediately link them to oil prices, taxes and, in particular, the excise duties levied by the government on the price of petrol and diesel.

We Italians only really notice and complain about the extent of the tax burden when there is some visibility – even if only psychological – of the tax we have paid. For example, we feel the burden of theVAT when the cost of our shopping goes up, of the Tari when the council bill arrives, of the IMU when it’s time to pay it, of the road tax when it’s due, and of energy taxes and excise duties when we open our bills.

Conversely, we perceive with less immediacy the burden of taxation when it erodes, even significantly, our savings.

Taxation on investments operates in an insidious and silent manner because it is generally withheld at source or calculated by the intermediary, it gets lost amongst management fees and market fluctuations, often affects a nominal return that has already been eroded by inflation, and frequently results in damage spread out over time, rather than an immediate expense.

In practice, there is no real understanding of the extent to which taxation reduces returns, of how much the stamp duty (a mini-wealth tax of 0.2 per cent) affects returns over the years, or of how much an uncompensated capital loss alters the actual outcome of the investment. Furthermore, the group of taxpayers/investors is perceived as being smaller and more affluent.