Italian tax dodgers uncovered by the Redditometro 21 January 2013 Last updated at 00:52 By Alan Johnston BBC News, Italy The Italian authorities have been accused of resorting to police state-style tactics with the introduction of a new weapon to hunt down the nation's many tax dodgers. The new procedure makes it possible to scrutinise any family's spending pattern, and compare this with what it says it earns. Tax evasion in Italy has been a chronic problem for generations. The authorities say the equivalent of nearly 120bn euros (£100bn, $160bn) worth of revenue is lost every year. And the nation's army of tax inspectors desperately needs more firepower. But some commentators have been outraged by this month's launch of what is called the Redditometro - the Income Meter. It has been described as unacceptably intrusive, the sort of thing that East Germany's secret police might have dreamt up . How it will work The Italian tax inspectors have always had a lot of useful information to help verify income tax returns. They have had data relating to major items of expenditure, like home and car ownership, and so on. But the Redditometro will now help the authorities get a better fix on people's likely spending habits in many other areas of daily life. First, the system has divided the entire population into 11 classic, household types; couples, singles, families with children, etc. Then it has built up very detailed models that show how each category is likely to spend its income. The average probable outlay across 100 different areas of expenditure has been examined; food, drink, clothing, leisure pursuits, etc. Then these predictions have been further refined by taking into account regional variations. So the tax authorities believe that they will have a very good idea what sum, for example, the average family of four in southern Italy will be required to spend to get by. Then, if such a family's tax return suggests its income is substantially lower than that sum the authorities might get suspicious. The family will have fallen outside its expected spending pattern model, and an investigation might be triggered. The family might be asked, "How could you have so little income, and yet be spending the kind of money that we know a family like yours, in your part of Italy, must be spending every day?" The family may then have to explain more about where its money is coming from, and how exactly it is being spent. Porn magazine The newspapers have been full of talk of how you might actually find yourself discussing your breakfast and lunch arrangements with the tax collectors. And in the view of the Corriere della Serra newspaper columnist, Piero Ostellino, this is all too much. "This is not fighting tax evasion, this is investigating how you live, what you buy, what you wear," he said. I'm against the Redditometro not because I'm in favour of evading taxes. I don't think tax collection should be done by trampling on individual liberties. Mr Ostellino argued that how he or any other Italian chose to spend their money was not the state's business. "I would like to live in a country where a cardinal can every month buy a pornographic magazine without having to explain this to the tax authorities!" he said. This is like the former East Germany! Mr Ostellino said he had "a heap of letters" from readers who supported his assault on the coming of the Redditometro. And a columnist in another paper wrote of fears that her country lifestyle might wrongly fall under suspicion; that she might become collateral damage in this new offensive in the war on tax cheats. She owns three horses, and she seemed to believe that in its number-crunching, the Redditometro would decide that to be able to afford them, she would have to be earning the equivalent of 41,338 euros (£34,611, $55,000 a year). But the columnist said that although she did not make that kind of money, she still found a way to organise her spending in a manner that meant that she could keep the animals she loved. She wondered if she might now find herself being forced to explain her lifestyle choices to some suspicious bureaucrat. Ticking time bomb In the face of this sort of clamour, the taxmen have rallied to defend their new system. Italian government spending 2010 Estimated cost of tax evasion 120bn euros Total government spending 782bn euros, of which: Defence 22bn euros Public order and safety 30bn euros Health 118bn euros Education 69bn euros Social protection 317bn euros. Source: Eurostat "The creation of the Redditometro emerges from the common-sense assumption that a certain amount of expenditure must correspond to a certain amount of income," said the head of the national Revenue Agency, Attilio Befera. The new mechanism was similar, he added, to one used in the United States. It was no more than a method for the singling out of "real cases of shameless tax evasion." But the timing of the launch of the Redditometro has been unfortunate. Italy is in the thick of an election campaign. The fearsome-sounding new system was never going to be popular with voters, and politicians have not been slow to condemn it. The outgoing Prime Minister, Mario Monti, described the Redditometro as a "ticking time bomb" left by the government of his predecessor, Silvio Berlusconi. Mr Berlusconi himself has said he would consider abolishing the system if he is returned to power. And the man most likely to be in a position to form the next government, the leader of the Democratic Party, Pier Luigi Bersani, has said he would look for different ways to fight tax evasion. Limited aim With the new mechanism getting such a hostile reception, something had to be done. And after talks with the government, the tax authorities issued a statement aimed at calming fears. They stressed that the Redditometro weapon would not be aimed at the general population. They said that although they had their suspicions about the tax returns of four million Italians, the new system would actually only be brought to bear on the finances of 40,000 families each year. And even if the taxmen might feel rather embattled over the Redditometro controversy, they do believe that they are making progress in the wider war. There are signs that public determination to counter tax evasion is hardening, with a sharp rise in the number of calls to a hotline that people can use to report dodgers: landlords, shopkeepers or tradesmen who they suspect may be fiddling their books. The financial police have reported a rise of more than 90% in the number of callers during the first nine months of last year compared with the same period in 2011. Meanwhile you can use the Redditest, which is an app that you can download to test yourself, to see if your income matches your spending and if you are "at risk."