Italy’s chronic tax evasion started to rise again four years ago after years of declines, and has been worse than thought, the latest government data showed on Monday.

Tax evasion is a politically sensitive issue in Italy. The data mostly covers the period just before Prime Minister Giorgia Meloni took office in October 2022, but could have an impact on the debate about her changes to policies she inherited.

Meloni has argued that past crackdowns did not work and has called for moves to soften the approach to tax collection, including raising a limit on cash payments and offering numerous tax amnesties. Her opponents say the moves will make the situation worse.

According to a report by a government-appointed commission, which has not yet been published but which Reuters has reviewed, the estimated maximum amount of missed taxes and social contributions rose by 3.5 billion euros to 102.5 billion euros ($119.5 billion) in 2022 from 99 billion euros in 2021.

In 2021 tax evasion rose by around 2.4 billion euros from 2020.

Italy releases its sensitive tax evasion estimates with a three-year lag, so that governments cannot include increases that may prove temporary in their government revenue.

The new figures factor in data stemming from a 2024 revision of state accounts by statistics bureau ISTAT, as well as a new methodology which led to a major overhaul of past estimates for tax evasion.

Successive Italian governments had said the tax evasion problem was easing, citing a downward trend.

But according to the new figures, the total improvement from 2018 to 2022 was just 5.9 billion euros at best, far below the 26 billion over 2017-2021indicated in the previous report published late last year.

Economists have credited improvement in the propensity to pay taxes to rules introduced progressively since 2011 that have pushed traceable digital payments and tightened controls.

Among past moves to soften crackdowns on evasion, Meloni raised a limit on cash payments to 5,000 euros from 1,000. She was forced to backtrack on a proposal to cut sanctions against shopkeepers refusing to accept more transparent digital payments, following criticism from the European Commission.

The 2026 budget announced this month includes a large-scale tax amnesty which allows people who have not honoured their tax bills up to 2023 to settle the dispute with the state revenue agency without sanctions or interest.