Italy has recently approved a law (n. 42/2009) implying a strong federal reform of the State. The law regulates the allocation of fiscal power to regions and municipalities and introduces the criteria of standard expenditure and standard cost which should be adopted in the allocation of the federal transfers. The paper contains a simulation of the new financial system regarding either primary expenditures (health, social assistance and school), or secondary expenditures. More in detail the simulation shows that primary expenditure, about 116 billion euros, can be financed through 84.95% of the value added tax and a 3.81% regional tax rate on income. As far as it concerns secondary expenditure (6.7 billion euros) results show that the South of Italy will receive less money with respect to the status-quo provision, whatever the chosen equalization level.
Keywords: Legge 42/2009, addizionale, compartecipazione, perequazione, federalismo, trasferimento
Jel Code: H24 H25 H71 H72