The Italian Constitutional Reform: Consequences for the Public Finance System

An important reform of the Italian Constitution, has been approved by Parliament in April 2016 and will be submitted to a referendum in Autumn 2016. This paper examines its consequences on the procedures for approval of the budget and of expenditure bills and on intergovernmental financial relations. The abandonment of a perfect bicameral system will give to the lower house a clear prevalence in the approval of laws including the budget. This will bring Italy more in line with the international experience. The Senate however will maintain equal legislative power in a series of matters. The capacity of playing its role effectively will depend on the implementation of the reform. In particular the actual mode of selection of senators by regional councils needs to be clarified. The reform also reshapes the relations between State and Regions, in favor of the central State. Particularly important is the shifting of co-ordination of public finance and the taxation system from the matters attributed to concurrent legislation to those for which the State has exclusive legislative powers. The most serious limit of this part of the reform, however, is the virtual exclusion of the five Regions that have special forms of autonomy.