Italy’s latest move to reduce public spending is
designed to give more fiscal powers to local governments. Championed by the
populist Northern League party, the proposed fiscal federalism bill, recently
approved by the Italian Cabinet, would shift, over a five-year term,
significant amounts of federal funds from the central government in Rome to
local governments.
Although the bill must still be approved in
Parliament, majority politicians expect it will pass.
Achieving fiscal federalism was a major election
promise for the Northern League, and the often-rebellious party, predominant in
Italy’s industrialised North, has in the past threatened to withdraw its
support of Berlusconi’s majority coalition should the bill not be approved. The
devolution idea was first introduced in 1994 by the then majority government
led by Silvio Berlusconi.
Supporters of the bill argue that it would give
incentive to local officials to spend more efficiently, something several
regional governments have historically failed to do, and make it easier to
discern how and how much each region and municipality spends. Regions would
receive directly the taxes collected from citizens in their respective
territories, then distribute the revenue to the provinces and municipalities.
Thus regions, provinces and municipalities would be fiscally autonomous.
Proponents maintain that the new system promises
more evenly distributed public expenditures for services like healthcare,
welfare and education. Majority politicians argue it would reduce the
North-South divide, provide fiscal rewards for local and regional governments
that spend more efficiently and create sanctions for those that do not. They
also promise an emergency fund for municipalities at risk of bankruptcy.
Interior minister Roberto Maroni stated that the bill could save an estimated
15 million euro.
Because the transition to the new system, if
approved, would be complicated, the fruits of the proposed bill are not likely
to be visible for at least two years, maintains Tremonti.
