Poor Taxi Drivers

On July 2009 on the web site of national newspaper La Repubblica appeare the following title

It says:

“Restaurateurs like pensioners they have both the same tax return / The case of micro-firm that earn less than employees”

Let’s consider another title of 2007

It says:

“Taxi drivers: very poor or big tax evaders their tax return is on average 13.800€”

Back to the article of 2009 we can read

So the average for taxi driver is now from 15k to 17k.

Let’s make some quick math.

A roman taxi driver in 2005 had an official income o 14k€. Let’s even assume that now it reaches 20k€. The flat rate for a ride from Rome centre to Fiumicino Airport is 40€. In the evening a ride from airport to North Rome costs on average 60€. Let’s assume that a taxi driver earn 30€ for each ride on average. An annual income of 20k means 666,6 rides (funny?) that is 3,3 rides per day if we assume a very conservative 200 working days per year. Can you believe this?

The last piece of the puzzle is the value of driving license. Tax inspectors in Emila Romagna estimated in 2005 a value of 200-240k. To keep the analysis simple we used gross figures, but the basic meaning is more than clear. Would you buy for 200 a license that allows you to earn 14 per year?

Self employed people in Italy pays taxes on the base of industry studies. This means that if their tax return is lower than what can be expected on the basis of industry studies there in an automatic control from tax inspector. The result is that large majority return an income equal to the minimum expected according industry studies. This allowed roman taxi driver to return an average income of 14k in 2005.

Let’s do some more quick math. A taxi driver may probably work 300 days per year for something like 10 hours per day. Let’s say that each working hour on average produces the income of just one ride and it is 30€. This ends with 10 x 30€ x 300 = 90.000€ per year.

Should industry studies be revised?

Do Italian employees understand the zero sum game that transfers onto them the burden of taxes unpaid by self-employed people?

If they even understand the game, do they realize what they are doing when they support political parties soft with tax evasion?