accountability must naturally occur without any challenge to the state's legal and financial unity. On the
contrary, the unity of the state should end up being strengthened if the process of dividing up the fiscal
responsibility occurs in accordance with a responsible and efficient plan.
Building up the decentralised government entities, in addition to increasing their responsibilities at a
fiscal and financial level and thus making the entities more accountable to citizens and to the local
electorate, will be able to contribute significantly to improving the allocation of public resources and to
promoting the economic development and the income of the more deprived regions.
The Government's action plan included in the bill for the enabling act is aimed at planning and achieving
federalism that is not only responsible, but also has shared concerns, and hence, “the measures regarding
matters that are part of the constitutional protection of “essential levels” (Article 117, Paragraph 2, Letter
m) must conform to the criterion of the full coverage of needs”, while for “the autonomous regional
entities, which in other words are not representative of the absolute needs of social fairness and of
citizenship, it is possible to prefigure financing systems in which the equalising role of the state is less
pervasive.”
The equalisation mechanism has particular significance since it is based on methods of standardising
revenues and expenditures that are suitable for getting beyond the historical expenditure criterion at all
institutional levels. The objective is to establish standard parameters for expenditures based on the
spending purpose, considering needs and the costs of meeting them in a balanced and level comparison
of the different areas needs of the country.
Completing the plan for an orderly system of financial relationships between the various levels of
government means that three principles guaranteed by the Constitution (as reformed in 2001) must be
reconciled:
a) the financial autonomy of regions and local entities, which entails territorial differences
in the rendering of services;b) the equalisation necessary for uniformity in the essential levels of services, which
requires important equalising transfers;c) the sustainability of the overall condition of the public accounts, which means that
coordination is needed between the disbursing entities and that, as part of such
coordination, the central government must have a leading role in defining the budget.The system for financing decentralised entities establishes that regional and local taxes and joint
participation in state taxes will be the main source of financing the functions for which the decentralised
entities are responsible. Regional and local taxes are to be earmarked for the task of guaranteeing the
manageability of budgets, the adaptation of the levels of public intervention to the local situations, and
the responsibility of the local administrations. In turn, the joint participation in the tax system will
guarantee the stability - including in a dynamic sense - of the volume of financial resources.
The financing system has been designed so as to respond to the needs for stability and autonomy. At the
same time, the exercise of civil and social rights across the entire nation is to be guaranteed by a system
of equalising transfers which are capable of ensuring the full financing of (i) essential levels of services
which concern such rights and (ii) the fundamental functions of local entities (as defined in Article 117 of
the Constitution).
With regard to the responsibility for expenditures not referring to essential services or fundamental
functions, the equalisation is to be transparent and based on fiscal capacity.
For such expenditures, the possibility of differentiation in the levels of public intervention from area to
area is acknowledged.
The design of the equalising system thus includes two components that reconcile the needs for uniformity
and autonomy.