The tiny mountaintop republic of San Marino long served as a tax haven for Italians. Now it is watching helplessly as its neighbor's hard line on undeclared funds drains it of billions in capital.
In all, euro1.25 billion ($1.87 billion) has been withdrawn from accounts in San Marino since Italy announced a tax amnesty in October for scofflaws hiding income abroad, according to Finance Minister Gabriele Gatti.
The amnesty threatens to deepen San Marino's recession and is creating worries about the future of its lucrative banking industry, which grew behind a veil of banking secrecy to represent 18 percent of the country's economy.
As a result of the amnesty, Fitch Ratings has downgraded the Republic of San Marino's long-term credit rating to "A" from "AA-." Fitch said the Italian tax amnesty threatens "the country's business model."
Can the facilitation of fraud be called a business model? Because it is clear that was what it was doing.