The current debate surrounding Italy’s new law on fiscal federalism has remained somewhat
on the sidelines as the latest avalanche of personal and political scandals
surrounding Premier Berlusconi have occupied the hearts and minds of Italians
in the past months. Amidst the nation’s flashy political moves, most of which
evoke either curiosity or disdain in its citizens, some of the more serious
issues concerning the country’s urgent need for fiscal reforms have not received
the proper attention and debate that their urgency would suggest.
Thus, as the government proceeds to approve the decreti attuativi-guidelines for the
application of a new law-to implement fiscal federalism, many are left guessing
what, exactly, such changes mean for Italy’s diverse regions.
Up until now, the large sum of taxes that pay for
regional and local investments in health, education and infrastructure has been
both collected and distributed by the central state, a system also known as regionalism.
The goal of fiscal federalism, however, is to drastically restructure Italy’s
public finances by giving more fiscal autonomy to its different political
administrative sections: the regions, provinces and comuni. Thus, the new law will institute throughout Italy’s regions something analogous to what already takes
place in Italy’s statuto speciale regions
such as Alto Adige and Sicily and the fiscal systems of such federal nations as the United States, India, Canada, Australia and Brazil.
In theory, fiscal federalism is all about handing down
responsibility and delegating the power of taxation to a regional level, but
will this work in practice?
First, it should be noted that although only approved
as a law last year (law 42/2009), the principles of fiscal federalism have been
outlined in Italy’s Constitution under Title V, article 119. Next, the new
responsibilities will be rolled out over the next seven years. By then,
regions, provinces and comuni will be responsible
for addressing fiscal evasion and poor management of resources in the different
areas of health, education and infrastructure. The transfer of tax funds that
has been administered by Rome to the
provinces will be no more.
A considerable part of the debate on the new
‘centrifugal’ forces unleashed by law 42/2009 pertains to Italy’s South-North divide.
Some believe that handing fiscal rights and
responsibilities to the provinces will result in a more effective response from
local political spheres. In particular, this thinking goes, Italy’s southern regions will eventually have to come to
terms with their excessive spending and tax evasion, to become out of
necessity, more responsible in handling their public debt.
On the other hand, critics of fiscal federalism
suggest the practical fallout that a law designed solely to fulfill Northern
interests (and pursued strongly by the Lega Nord) might afflict on national
cohesion, only exacerbating the problems of the Mezzogiorno. Whereas the
Northern economic strongholds such as Lombardia, Piemonte, Veneto and Friuli
are ready for fiscal federalism, others are not. Indeed, the fear is that in
those regions unready for independent management, services that are already
underfunded, such as health care and education, will fall into greater disarray.
As far as Tuscany is concerned, local government officials have
expressed doubt about the government passing quick decreti attuativi without consulting properly the individual needs of
the different regions, especially when it comes to discrepancies in public
health care. Although Tuscany enjoys a strong reputation for keeping its budget
on course and for fighting tax evasion, it recognizes that other regions might
not enjoy the same status and thus need to work together to achieve a
It is undeniable: something must be done to address Italy’s excessive public debt, caused by a considerable
amount of overspending and tax evasion. But under the present reform, will the
South have the proper tools to handle this new level of autonomy? How does the
government intend to help the more disadvantaged regions to live up to their
fiscal responsibilities? Only time will tell whether federalismo fiscale will result in
greater fiscal responsibility throughout Italy.
President of the Chamber of Deputies Gianfranco Fini: ‘[Fiscal Federalism can] compromise national cohesion, helping to
deepen internal division and reducing levels of competition of the economic
system,’ Cited in ‘Al Sud Governatori Dimezzati,’ Il Sole24ore, July 27, 2010.
Episcopale Italiana (CEI): ‘[It is]
appropriate [to meditate on] the territorial ambiguities of the country
[avoiding] perverse effects [such as] the federalism of abandonment.’ (Cited in ‘I
Vescovi approno al federalismo ma bocciano quello fiscale,’ Corriere della Sera, May 10, 2010.
Sociologist from the University of Torino, Luca Ricolfi:
‘The proposed mechanisms remain muddled
and there is a concrete scenario that a collapse in the government will lead to
a recurrence of secessionist drives.’ Cited in ‘Federalismo Fiscale,
incognite sulle Risorse,’ L’Avvenire.
Writer and journalist, Roberto Saviano: ‘The Mafias
are betting on fiscal federalism; they like a certain kind of federalism, that
which will turn over to them much of the South … The Mafia mentality is
essentially predatory, waiting to devour resources and it is much easlier to do
so in the regional capital cities than in Rome.’ Cited in L’Espresso.
Finance Minister Giulio
Tremonti: ‘Fiscal federalism
will provide us with less costly services, more transparency for actions taken
in the public sphere and with Italy’s realignment to
the rest of Europe. It will bring us back to where we were in better
times.’ Speech given during a meeting by the Circoli Nuova Italia, July 23, 2010. ‘Fiscal
federalism and the eventual territorial autnomy, guaranteed by article 119 of
the Constitution, in force since 2001, will mean transparency, responsibility
and control over resources; it is the exact opposite of what Mafia clans would
want.’ In response to statement by Roberto Saviano in the L’Espresso interview cited to the left.
Prime Minister Silvio
Berlusconi: ‘An important reform that
should change the structure of our country [and that will generate] savings and
equity rendering the country more efficient.’ After final approval of fiscal
federalism in the Council of Ministers, September 11, 2008.
President of the Technical Commission for the
implementation of Fiscal Federalism and Professor Luca Antonini: ‘Nowadays,
public administrators are not adequately made responsible. Fiscal federalism is
the cure for these problems’ In an interview with La Stampa, July 12, 2010.