Grazie, ma non grazie: that, one imagines, will be how Italians reply to an offer by Prime Minister Giorgia Meloni’s government that they declare their private holdings of gold — so it can be taxed. The 12.5 percent levy is being billed as a kind of amnesty in light of the tradizione among Italian families to keep and pass down stores of gold as a hedge against debased fiat currencies like the euro, and, formerly, the lira. Not to mention the dollar.

It looks like a rare misstep by Signora Meloni, to whom these columns have given unflinching support. The FT reckons that her government “is looking to gold — and its soaring value — to raise more money for the public coffers.” What “soaring value,” though? The value of gold is the same as it always was. The rationale for the proposed Italian tax is not a rise in the value of gold but the collapsing value of the lira — along with the euro and the dollar.

Members of Italy’s rightist governing coalition eye a windfall of some 2 billion euros from the proposed gold-taxing scheme. Many Italians, the FT reports, have “undocumented gold coins, jewellery and bullion,” in many cases “inherited from parents and grandparents who traditionally saw the precious metal as safer” than paper money. Yet Italians, if they lack proof of the original price, are socked with a 26 percent tax when spending gold for cash.

The envisioned gold tax is being derided by some critics as a reflection of the government’s “desperate hunt for funds,” as the FT puts it, partly in order to cover a tax cut for Italy’s middle class. “This government doesn’t know where to get money,” said a legislator from the opposition Cinque Stelle party, Gianmauro Dell’Olio. “I don’t think people will go start weighing necklaces that their grandmother or grandfather gave them,” he added. 

A senator in the Forza Italia party, Dario Damiani, who favors the plan to tax gold, says it is meant to “encourage the monetisation of gold held by Italians.” That’s a creditable goal, but if Italian lawmakers want to restore a monetary role for gold, why not take a more direct approach by bringing back a convertible currency? That would mean reviving some version of the gold standard that was in effect, to varying degrees, until the end of Bretton Woods.

Historically, currencies like Italy’s lira had a fixed value, set by law, in terms of gold. Paper money could be exchanged upon demand for gold at the legal rate. That system, which had endured for centuries, helped foster economic growth with low inflation — while preventing governments from engaging in deficit spending or racking up vast public debts. Just the kind of fiscal rigor needed at Rome — not to mention Washington — today.

Even if Signora Meloni’s government is plagued by red ink, Italy’s vast government holdings of gold — the third-largest in the world, behind America and Germany — would go toward easing a return to honest money. Rome’s gold horde is partly stored at the Banca d’Italia in a vault known as “the sacristy.” While trying to tax Italians’ private gold holdings seems futile, restoring convertibility of the currency could well spark a new miracolo economico.