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Regional Finance in Italy: Past and Future

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Italian Regionalism: Between Unitary Traditions and Federal Processes

Part of the book series: Essays on Federalism and Regionalism ((SEFR,volume 1))

Abstract

The financing system of the Regions is on the verge of a major reform enacted by Law No. 42 of 2009. After a long delay, Law No. 42 implemented article 119 of the Constitution, as amended by Constitutional Law No. 3 of 2001. But even before this reform, and hence while article 119 of the 1947 Constitution was still in force, the financing system of the Regions had already undergone a number of changes that, in some respects, may be seen as having prepared the ground for the most recent changes introduced by Law No. 42.

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Notes

  1. 1.

    For a historical analysis of the organisational and institutional evolution of health care in Italy, cf. Lo Scalzo et al. (2009).

  2. 2.

    The GDP data are taken from ISTAT (Conti economici territoriali, selected years). Conversely, data on the Regions’ expenditure are taken from Istituto di studi sui sistemi regionali, federali e sulle autonomie Massimo Severo Giannini del Consiglio Nazionale delle Ricerche (ISSiRFA-CNR), Osservatorio Finanziario Regionale (Regional Financial Observatory), which can also be found on the Institute’s website (www.issirfa.cnr.it). Sections 3 and 4 also draw on data from the same source.

  3. 3.

    For a thorough analysis of the expenditure containment policies implemented in the 1990s in respect of the Regions and particularly the SRs, cf. Buratti (2002).

  4. 4.

    The more recent SRs are Friuli Venezia Giulia, created in 1963, and the two Autonomous Provinces of Trento and Bolzano, instituted in 1972.

  5. 5.

    The Conti pubblici territoriali (CPT) data bank of the Department for Development Policies of the Ministry of the Economy, which is only available for the period 1996–2008, has been used for the decentralisation index. The aggregate public expenditure considered here does not include, as far as Central Government is concerned, the expenditure on servicing the public debt and pensions.

  6. 6.

    It was on 8 August 2001 that the first multilateral agreement between the Central and the Regional governments on the financing of health care expenditure containment was concluded. The first plans for reducing the health care deficit for certain Regions were drawn up in 2005 (see in this connection Jorio 2009).

  7. 7.

    In 2009, general administrative expenditure in per capita terms was 709 euro in the SRs compared with 104 euro in the ORs.

  8. 8.

    With regard to the latter sector, the steep slump between 1985 and 1995 (from 27 to 16 %) is due to the fact that some SRs during this decade were excluded from Central Government transfers for National Health Service as a result of the public deficit reduction policies. To compensate for these cuts, these regions had to reduce the expenditure in other sectors.

  9. 9.

    On the initial system for financing the ORs, see Buglione and Pierantoni (1980) and Buglione and France (1983).

  10. 10.

    We should therefore speak about “systems” of Central government tax sharing because the shared taxes and the proportions allocated differ from one Region to another, and each of them has been updated several times. In this connection, see Buratti (2002), Fabbrini et al. (2008), Immordino (2009) and Cerea (2010).

  11. 11.

    On the evolution of the Regional financing system in the 1990s, see Bosi and Tabellini (1996), Strusi (1999), Arachi and Zanardi (2000), Buglione (2001) and Giarda (2000).

  12. 12.

    On the way in which the Regions have actually used this autonomy, see Buglione and Marè (2010).

  13. 13.

    The only exception is one of the minor taxes: the Regional fuel consumption surtax instituted by Central government law, which is left to the discretion of the Regional governments (currently levied in only seven Regions and in each instance close to the maximum allowed rate of 2.6 euro cents per litre).

  14. 14.

    With reference to the equalisation fund provided by Decree No. 56/2000, see Zanardi (1999), Giarda (2000), Liberati (2001), Barbero (2004) and Mercuri and Fontana (2005).

  15. 15.

    Over the past 10 years, GDP has increased by 40.6 % in the northern SSRs, compared with +37.4 % in the southern ones.

  16. 16.

    In this connection, see Barbero (2006) and Balassone et al. (2002).

  17. 17.

    For an initial analysis of the prospects for the SRs’ finances following the reform, see Buglione (2011).

  18. 18.

    For an overall analysis of the law, see Soriero (2009) and Ferrara and Salerno 2010). On the decree implementing the reform of Regions’ financing system, see Buratti (2011), Buglione and Jorio (2011) and Jorio (2011).

  19. 19.

    The decree comprises 5 Chapters, 41 articles, and 158 paragraphs.

  20. 20.

    To avoid increasing the burden on taxpayers, central government personal income tax rates will be simultaneously reduced.

  21. 21.

    The decree requires regional governments to replace their existing transfers to municipal authorities with a share in RSPIT revenues.

  22. 22.

    This section will be financed by a share of the VAT National yield. This share has not been set up, but it will have to be varied regularly in order to take account of two variables: the dynamic of the standard yield from the assigned tax revenues and the dynamic of the requirement to perform the core functions identified at the national level, taking account of the targets set for balancing public budget.

Abbreviations

CG:

Central Government

EHCL:

Essential Health Care Levels

ESL:

Essential Service Levels

GDP:

Gross Domestic Product

ISP:

Internal Stability Pact

LGs:

Local Governments (Provinces and Municipalities)

NHS:

National Health Service

ORs:

Ordinary Regions

RSPIT:

Regional Surcharge on Personal Income Tax

RTPA:

Regional Tax on Productive Activities

RTV:

Regional Tax on Vehicles

SCGs:

Sub Central Governments (Regions, Provinces, Municipalities)

SRs:

Special Regions

VFI:

Vertical Fiscal Imbalance

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Authors and Affiliations

  1. ISSiRFA-CNR, Via dei Taurini, 19, 00185, Rome, Italy

    Enrico Buglione

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  1. Enrico Buglione
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Correspondence to Enrico Buglione .

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  1. Regionalism, Federalism and Self-Governm, National Research Council - Institute for, Rome, Italy

    Stelio Mangiameli

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Buglione, E. (2014). Regional Finance in Italy: Past and Future. In: Mangiameli, S. (eds) Italian Regionalism: Between Unitary Traditions and Federal Processes. Essays on Federalism and Regionalism, vol 1. Springer, Cham. https://doi.org/10.1007/978-3-319-03765-3_12

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