Since the Italian parliament endorsed the fiscal federalism Law 42 in 2009 to the first application of a new equalization program in 2015, there was intense sequencing of various reform steps with regard to municipal governments, some of them in a net contrast with the framework provided by the federalism Law. At the end, the equalization program, which has been applied to partially reallocate resources within Fondo di solidarietà comunale in 2015-2016, is horizontal, based in part on the differences between estimated local expenditure needs and fiscal capacity and in part on the differences between fiscal capacity and its average value. Given the importance of the reform and considering the fact that its implementation was sequenced in distinct steps, which obscured many of its contentious issues, the purpose of this paper is to explain the modus operandi of the new equalization program and to quantify its redistributive effects under the hypothesis of its application at full of Fondo di solidarietà comunale and under some alternative scenarios. In both cases, municipalities in Southern Italy appear to benefit more than municipalities in any other Italian macro-regions.
Keywords: Equalisation system, standard expenditure needs, standard fiscal capacity, Fondo di solidarietà comunale-Italy
Jel Code: H77
Carmela Brugnano, Giuseppe Ferraina, Andrea Ferri, Larysa Minzyuk, Felice Russo, in "ECONOMIA PUBBLICA " 2/2017, pp. 93-133, DOI:10.3280/EP2017-002005