With regard to the coordination of public finance and the tax system, the reform introduces two changes. The first concerns article 117 which transfers the "coordination of public finance and the tax system" from the concurrent competence to the exclusive one of the State. On this point, the reform corrects what can only be considered an excess of federalist zeal on the part of the legislator in 2001. It is in fact evident that if coordination is a question - and not, for example, concertation - responsibility can only be attributed to the State (the only one, moreover, which has the responsibility of respecting the budget constraints vis-à-vis the European Union and, in fact, also the markets).
The second change concerns article 119, according to which the financial and tax autonomy of the Regions and Local Authorities can no longer be exercised only "according to the principles of coordination of public finance and the tax system", but "according to the provisions by the law of the State for the purpose of coordinating public finance, public finance and the tax system".
This change has been criticized by the champions of federalism, but in reality it limits itself to making explicit what had already been established for a long time by the Constitutional Court, for example with sentence no. 37 of 2004 which had indicated as necessary "the intervention of the state legislator, who in order to coordinate the whole of public finance, will not only have to establish the principles which the regional legislators will have to abide by, but also determine the broad lines of the entire tax system, and to define the spaces and limits within which the taxing power of the State, Regions and local bodies, respectively, can be expressed”.
Moreover, the Court has stated several times that in the current regulatory framework - i.e. the one that emerged from the 2001 reform - there can be no taxes that can be defined as "proper" to the regions in the sense defined by article 119 of the Constitution: there are, according to the Court , only taxes instituted and governed by state laws, the only peculiarity of which is that their revenue is attributed to the regions.
We therefore do not understand the concerns of those who fear an excessive limitation of the financial autonomy that the local authorities obtained with the constitutional reform of 2001. Not only because the Court has already delimited the boundaries of this autonomy in a rather restrictive way, but also because that autonomy, in fact, has never been fully realized.
The data of the Court of Auditors testify to this: considering public expenditure net of that for social security and welfare benefits, from 2001 to today the local component (Regions, Provinces and Municipalities) is an almost constant share, around 55%. of the total public administrations. Neither after 2001 nor after the approval of the Calderoli law of 2009 – which had the ambition of fully implementing fiscal federalism – is there any growing trend. The same is true for revenues, the local component of which has remained almost unchanged at 20 per cent of the total.
The point is that, beyond the proclamations and given the situation of our public debt, governments have been forced to keep the finances of local entities under strict control and have managed to do so, albeit at the cost of formidable tensions that have often jeopardized stability. They did so by placing limits, permitted by specific Constitutional Court rulings, on the most varied types of expenditure: consultancy, turnover, public salaries and even the number and salaries of regional councilors, etc. The only item that seems to have partly escaped control, and in which waste and inequality lurk, is that of the purchase of goods and services, which went from 23,6 per cent of total local spending in 2001 to 29,5 in 2014. Governments have always exercised strict control over local revenue as well, made possible by numerous Court rulings, as demonstrated by the ups and downs of Irap, the Irpef surtaxes or ICI-IMU-TASI.
If we add to this the consideration that nothing prevents the State from defining, with ordinary law, further areas of financial autonomy in favor of local entities and that, moreover, the new article 116 leaves the possibility of implementing forms of differentiated federalism in favor of regions with the accounts in order, it is easy to understand that the objective of the reform is not to frustrate a healthy and efficient federalism, but to avoid waste and duplication.
The reform therefore does not mortify fiscal federalism, but gives stability to the current structure, also laying the foundations for overcoming waste, which lurks above all in purchases, as it raises the principle of costs and standard needs, which, as is known, has been the main – and shareable – strong point of the supporters of federalism.
In summary, the reform clarifies who does what; the foundations are laid to eliminate waste and duplication; the uncertainty for citizens and businesses about the timing and methods of implementing the rules is reduced; investments are favored which are discouraged today by the existence of rules that overlap between levels of government and are unjustifiably different between territories; on the other hand, the incentive, which remains a fundamental pillar of the system, to compete to attract investments, development and jobs is not mortified.
Extract from “L'Economia del Sì”, edited by Irene Tinagli. Download here the document whole wheat.
