According to a report in the International Herald Tribune:
Gian Maria Fara, president of Eurispes, a research institute here, said Italy's annual underground economy was equal to the combined gross domestic products of Finland, Portugal, Romania and Hungary.
In a study released in January, Eurispes found that 25 percent of Italy's 40 million taxpayers declared an annual income of less than â‚¬6,000, or $8,000. All but 5 percent declared that they made less than â‚¬40,000 a year.
As they also note:
The shadow economy [in Italy] is one of the largest in the developed world: 25.7 percent in 2003, compared with 14.5 percent in France and 8.4 percent in the United States, according to a study by Friedrich Schneider of Johannes Kepler University in Linz, Austria.
the tax burden in Italy stood at 42.3 percent of gross domestic product in 2006.
To ease fiscal pressure, the Bank of Italy advised the government in April to cut taxes, "which are higher than the euro-area average and have reached an all-time high."
The government is saying no to that. Quite right to. Collect tax on the additional 25% and thta tax burden will fall to a quite fair (low even) rate of only a bit over 30%. That's the way to go.
Tax evasion is not sport. It's not socially justified. It costs real people real opportunities whilst providing those who commit the crime with a free-loading lifestyle. And no amount of tax cutting will change that. Societies need to collect what is due to them. Even in Italy.