Abstract

This note aims at evaluating the possible outcomes of the reforms recently adopted or under discussion in Italy (the tax reform bill, the reform of Section V of the Constitution, the new constitutional bill on devolution) on the Italian system of intergovernmental fiscal relations. On one hand, the Tremonti reform provides for the progressive abolition of IRAP; this note discusses how to assure to Italian Regions alternative financial resources in terms of sharing of national taxes or new regional taxes. On the other hand, the constitutional reforms introduce a large devolution of relevant functions from central to regional legislative power. Even if the practical effects of this reform are still unclear, two critical issues seem to emerge: how to finance the new regional needs, and how to design the system of equalizing transfers in a scenario where each Region can choose to assume different degrees of fiscal autonomy.