Making Federalism Work in Italy

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Making Federalism Work in Italy

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Alexandra Bibbee ()

Abstract

Fiscal federalism can be an important complement to structural reforms and budget consolidation. Empowering sub national governments, while at the same time making them accountable to local citizens in the uses of tax money, could improve the allocation of public resources and promote catch up of the lagging regions. Italy has launched itself in the federalist direction by decentralising spending, regulatory and tax powers in the late 1990s and reinforcing growing lower level responsibilities with a constitutional reform in 2001. The constitution has yet to be fully implemented, though the government has signaled its intention to do so. A stronger focus should now be put on the financing side, i.e. getting a better match between spending responsibilities and taxing powers so as to boost local autonomy and responsibility in line with the goals of federalist reforms. As the lower levels are fully in charge of health and long term care, they will face intense pressures due to population ageing, which is especially rapid in Italy, so that more tax bases should be devolved to them, especially as pension reform has reduced such pressures on central government. Redistributive mechanisms should be redesigned to improve fiscal effort, and Italy must decide in that context to what extent it can really afford to guarantee uniform national service levels – and conversely, how much regional differentiation of services it will tolerate in pursuit of higher efficiency. Framework conditions need to be strengthened, notably accounting standards which need to be upgraded and unified. Fiscal discipline under the Internal Stability Pact should be strengthened via better ex ante co-ordination and tougher sanctions ex post.

Faire fonctionner correctement le fédéralisme en Italie
Le fédéralisme budgétaire peut être un précieux complément des réformes structurelles et des mesures d'assainissement budgétaire. Donner plus de pouvoirs aux administrations infranationales tout en faisant en sorte qu'elles rendent des comptes à leurs administrés pour l'utilisation des recettes fiscales pourrait améliorer la répartition des ressources publiques et favoriser un rattrapage dans les régions en retard. L'Italie s'est lancée sur la voie du fédéralisme en décentralisant les dépenses, les pouvoirs réglementaires et les attributions fiscales à la fin des années 90 et en renforçant les responsabilités croissantes des niveaux inférieurs d?administration par la réforme constitutionnelle de 2001. Mais les nouvelles dispositions constitutionnelles ne sont pas encore pleinement appliquées. Le gouvernement a l'intention d'y remédier. Il faudrait maintenant mettre davantage l'accent sur le volet financier, c'est-à-dire faire mieux concorder les obligations de dépenses et les compétences fiscales, de manière à renforcer l'autonomie et la responsabilité des autorités locales conformément aux objectifs des réformes fédéralistes. Les niveaux infranationaux d'administration, qui ont totalement en charge les soins de santé et la dépendance des personnes âgées, devront faire face à de très fortes pressions du fait du vieillissement de la population, particulièrement rapide en Italie ; il faudrait donc leur décentraliser plus de pouvoirs fiscaux, sachant en particulier que la réforme des retraites a réduit les pressions qui s'exercent sur l'administration centrale. Il faudrait revoir les mécanismes de redistribution dans la perspective d'un plus grand effort fiscal et, dans ce contexte, l'Italie devra décider dans quelle mesure elle peut véritablement se permettre de garantir des niveaux nationaux uniformes de prestation des services publics – et, à l'inverse, quelle différenciation régionale des services elle tolérera en vue d'une plus grande efficience. Il faut renforcer les conditions cadres, en particulier les règles comptables, qui doivent être améliorées et normalisées. On pourrait obtenir plus de discipline budgétaire dans le cadre du pacte interne de stabilité avec une meilleure coordination ex ante et de plus lourdes sanctions ex post.

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 590.

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Date of creation: 20 Dec 2007
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Handle: RePEc:oec:ecoaaa:590-en

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Find related papers by JEL classification:
H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Health, Education, and Welfare
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-01-12 (All new papers)
NEP-PBE-2008-01-12 (Public Economics)

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