Reforming Fiscal Federalism and Local Government

Beyond the Zero-Sum Game

image of Reforming Fiscal Federalism and Local Government

This book describes and examines reforms of fiscal federalism and local government in 10 OECD countries implemented over the past decade. The country chapters identify common patterns and factors that are conducive to reforms of the intergovernmental fiscal framework, using a common methodological approach. The summary chapter highlights the cross-cutting issues emerging from the country chapters and shows the key factors in the institutional, political, economic and fiscal areas that are supporting reform success. The report’s approach results in valuable insights for policy makers designing, adopting and implementing fiscal federalism and local government reforms.



Italy: Law 42 on fiscal federalism

In 2009, the Italian parliament endorsed Law 42 on fiscal federalism, setting a milestone for Italy’s gradual move towards decentralisation and federal institutions. The law, which is based on a constitutional amendment passed in 2001, increased tax and spending autonomy of the regions, provinces and municipalities and overhauled the equalisation system, tackling the wide fiscal interregional differences in a consistent and efficient fashion (). A set of legislative decrees, some of which have not yet been implemented, determines intergovernmental tax arrangements, equalisation, fiscal rules and accounting harmonisation. The cost of the reform to both the central and sub-central governments is not yet known, but there is strong pressure for the reform to remain fiscally neutral.


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