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Unformatted text preview: ry different. Fiscal autonomy increases from 0.5% in 1990 to 21% in 1999 in “special”
regions and from 2.3% to 57.4% in 1999 in “ordinary” regions. At the same time, expenditure autonomy increases from
11.2 to 60% in ordinary regions and from 60% to 85% in “special” regions. Taking into consideration also the last fiscal
reform for “ordinary” regions which devotes 38% of VAT collected resources to “ordinary” regions (D.lgs 56/2000), their
fiscal autonomy increases further to 68% (see Table 5); furthermore their expenditure autonomy will be increased
starting from 2003 by removing the obligation to use a share of VAT funds for health fixed investments.
The data reported in this chapter show an increasing level of decentralisation and a considerable level of financial
autonomy. Some caution however needs to be used in considering budget data: the picture emerging from this data may
overemphasise the level of autonomy currently being attributed to regions. The issue refers to the way in which IRAP
(tax on productive activities) and the regional share of IRPEF (personal income tax) should be considered. They are
both classified in the budget as regions’ own resources. However it is only recently (2001) that regions have become
able to modify the tax base rate fixed by state law and attributed to them. 255 Commission on Fiscal Imbalance 5. DECENTRALISATION, FINANCIAL AUTONOMY AND THE EUROPEAN STABILITY PACT
Because of the agreements signed at the European level, and considering the current level of decentralisation, in 1999 a
domestic stability pact was signed and became effective. The domestic stability pact is designed to involve Regions and
other local authorities in the effort to attain the objectives agreed by the central government in the European Stability
and Growth Pact. The domestic pact requires local bodies to reduce deficits and their stock of debt. The target for the
first three years of the domestic pact, beginning in 1999, is the annual reduction in the total deficit of local governments
equal to at least 0.1 per cent of GDP. The local governments' accounts will be monitored for consistency by the StateRegion and State-Municipalities Conferences.1 No sanctions for non compliance are provided while, if Italy is sanctioned
under the excessive deficit procedure; fines will be proportionally levied on the bodies that fail to meet their targets.
Without going into the details of the domestic agreement, what is important is that the domestic stability pact is the first
attempt to answer the issue of rendering coherent the commitments taken in the European Growth and Stability Pact
and the internal behaviours of regional and local governments in particular in those countries which have a high degree
of decentralisation like Italy. It is true that the European Growth and Stability Pact entails an internal asymmetry between
responsibilities laid down at the national and regional/local level within a member state, which all influence the good
performance of each country vis-à-vis its budget target, and the de facto responsibility of the central g...
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