Bankers' best guesses about the Vatican's wealth put it at $10 billion to $15 billion. Of this wealth, Italian stockholdings alone run to $1.6 billion, 15% of the value of listed shares on the Italian market. The Vatican has big investments in banking, insurance, chemicals, steel, construction, real estate. Dividends help pay for Vatican expenses and charities such as assisting 1,500,000 children and providing some measure of food and clothing to 7,000,000 needy Italians. Unlike ordinary stockholders, the Vatican pays no taxes on this income, which led the leftist Rome weekly L'Espresso last week to call it "the biggest tax evader in Italy."
In 1962, Italy placed a 15% tax on all stock dividends, which two years later was raised to a 30% maximum. A rider to the original law that would have exempted the Vatican was specifically struck down. Nevertheless, the Vatican refused to pay the taxes—which might run upwards of $15 million a year-citing the Lateran Treaty of 1929 between Pope Pius XI and Mussolini. At that time, Italy agreed to pay the Pope $39 million in cash and $52 million in 5% government bonds as indemnity for losses suffered by the Pope when the Papal States were incorporated into Italy in 1870. Under Pius XII, Vatican money was shrewdly invested in stocks and real estate, and the capital has multiplied manyfold. The treaty also recognized the sovereignty of the Vatican, and a 1942 law written "in the spirit of the Concordat" exempted the Vatican from paying certain taxes then existing on dividends.
The Christian Democrats, who have ruled Italy most of the time since the war, never wanted to collect the dividend tax from the Vatican, but were under strong pressure from their Socialist coalition partners. Said Socialist Vice-Premier Pietro Nenni early last year: "No Socialist can take the responsibility for giving the Vatican tens of billions of lire." Caught in the crossfire, Christian Democratic Premier Aldo Moro asked the Vatican for a list of all its Italian stockholdings, assuring the Holy
See that the exemption would then be granted. But the Vatican Secretary of State, Amleto Cardinal Cicognani, coldly replied that a sovereign government does not tell another about the state of its finances.
Still trying to legalize the Vatican's refusal to pay the tax, the Christian Democrats in the government wrote a bill—Law No. 1773—that would exempt Vatican dividends and slipped it through Parliament during the presidential crisis that followed the resignation of President Antonio Segni. But before the bill could be promulgated, the Socialists read it and blocked it.
That made the Vatican furious. A spokesman hinted that unless the harassment ceased, the Holy See would sell its Italian stockholdings. The dumping of millions of shares of stock on the already shaky Italian market would precipitate a financial crisis and bring down the Italian government. Under the threat, the Moro government will probably give final approval to Law No. 1773.