Buratti C. (2009)

Autonomy and Responsibility in the Italian Federalising Process. Working Paper SIEP n.632



In any country fiscal federalism is a compromise between efficiency and distributive targets. Both federal countries and decentralized unitary States have to cope with this problem. Old federals States founded in the 19th Century or before, by merging a number of independent units, stressed the efficiency target of moving the supply of universal public goods to the federal level, but interstate solidarity was not disregarded at all – Canada, for instance, has an effective fiscal equalization scheme. Federal states born in the 20th Century from unitary States pursue the efficiency target by shifting some functions and related revenues from the central level to the regional level of government and stress more heavily than the oldest federal States the equity target. This is probably due to the guaranties that must be offered to the weakest regions in order to get to an agreement on the federal reform of the State. Federal States show a very different degree of fiscal autonomy of the federated States (or Regions) and of fiscal equalization. Moreover equalization schemes rely both to fiscal capacity and needs, with different mixes in different countries. Often, national standards must be guaranteed all over the Country with regard to services which are of paramount importance to the well-being of population and have a relevant role in the process of growth both of territories and individuals (e.g. education and health).