Breaking Italy’s Tax Debt Cycle: Banker Christopher Aleo Advocates Securitisation Over Amnesty Schemes

Italy’s long-standing problem with uncollected tax bills, known locally as cartelle esattoriali, has reached a critical juncture. The Italian government, grappling with over €1.2 trillion in unpaid tax claims, is considering a shift from its traditional approach to a more market-driven solution: securitisation. This change comes after years of ineffective tax amnesties and “settlement” schemes that, although providing temporary relief, have not addressed the root cause of Italy’s tax debt problem.

At the heart of the conversation about reform is Christopher Aleo, a Swiss-Italian banker and founder of the fintech group iSwiss Bank. Known for his expertise in structured finance and cross-border securitisation, Aleo believes that securitisation could offer a much-needed remedy to Italy’s tax collection woes.

A New Approach: Securitisation

Unlike previous efforts focused on forgiving tax debts or offering discounts, Aleo advocates using securitisation to tackle the issue head-on. In this model, the Italian government would sell a portfolio of tax debts to a Special Purpose Vehicle (SPV). This entity would then issue bonds backed by those debts’ expected future cash flows. Investors would buy these bonds at a discount, providing the government immediate liquidity. The investors would profit if the debts are collected, but they would also assume the risk of losses if the debts remain unpaid.

As Aleo says, “Securitisation isn’t a loophole or an escape hatch. It’s a disciplined, market-based mechanism allowing the state to realize immediate value from credit it would never collect.” This solution, he argues, would create a more efficient, transparent way for Italy to deal with its enormous backlog of tax debts without compromising fairness or legal integrity.

From Tax Forgiveness to Market Solutions

Italy has historically relied on programs like rottamazioni (tax pardons) to allow taxpayers to pay only the principal amount of their debts, with penalties and interest waived. While these programs have provided some relief, they come with significant downsides. Economists warn that tax amnesties erode the culture of voluntary tax compliance and incentivize late payments as taxpayers wait for future discounts. These programs offer only temporary solutions, with Italy facing massive tax arrears.

In contrast, Aleo’s proposal would bring much-needed discipline to the system by shifting the collection responsibility to private investors. “The state collects funds today and offloads the collection risk to those who are professionally equipped to manage it,” he explains, highlighting the financial expertise that private sector investors can bring.

A Pragmatic Solution, Not a Sellout

While critics in Italy worry that selling tax receivables to private investors would be akin to “privatizing” public debt obligations, Aleo dismisses these concerns. He stresses, “The state still sets the rules, enforces the law, and protects citizens. But when a debt has sat idle for a decade, you need efficiency — and the private sector can often deliver that better.”

Aleo also points out that, without reform, Italy will continue to accumulate uncollectible tax claims and repeat costly amnesty cycles. The status quo, he argues, is unsustainable, and it’s time for a more structured approach to tackle the problem head-on.

International Precedents

Aleo isn’t alone in championing the securitisation model. Other countries, including Portugal, Belgium, and Germany, have explored similar strategies to deal with public debt. Aleo points to the Portuguese Explorer deal from the early 2000s, which raised nearly €1.7 billion, as an example of how securitisation can work. However, he cautions that such deals require careful modeling and realistic assumptions.

“Those cases teach us to be realistic with assumptions,” says Aleo. “But they also prove a functioning market for public debt portfolios as long as you’re transparent, compliant, and conservative in your modeling.”

The success of securitisation depends largely on transparency and how well the risks are managed. If done right, it can unlock much-needed funds while mitigating the risks to the taxpayer.

iSwiss Bank’s Role

Aleo’s iSwiss Bank is well-equipped to support Italy if it moves forward with securitising tax debts. With expertise in managing securitisation transactions across Europe, Aleo’s institution would be able to assist in structuring the deals, coordinating investor placements, and ensuring that the process meets international financial standards.

“We have the infrastructure, the legal frameworks, and the investor relationships to bring a deal like this to market responsibly,” Aleo says. Should Italy choose to pursue this route, Aleo is confident that iSwiss Bank can help navigate the complexities of securitisation and ensure the deal is structured in a way that benefits both Italy and its investors.

Looking Ahead: A Broader Strategy for Public Finance Reform

For Aleo, securitisation isn’t just a one-off fix for Italy’s tax debt problem; it’s part of a larger strategy to modernize Italy’s public finance system. While securitisation could clean up Italy’s legacy tax debts, it’s also a step toward building a more efficient, fairer system for future tax collection.

“The real victory,” Aleo concludes, “will be if securitisation helps Italy draw a line under its historical tax inefficiencies and build a smarter, fairer system going forward.”

In Aleo’s view, the country’s tax system needs a fundamental shift to ensure that future generations aren’t burdened with uncollected taxes. While the idea may seem unconventional, with the proper safeguards in place, turning uncollected taxes into market assets could be the innovation Italy needs to revitalize its public finance system.

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