Federalism in Italy

‘Federalismo’ is a word being bandied around by Italy’s Berlusconi led government.

The subject of federalism in Italy is as controversial as the nationalist Lega Nord party led by Umberto Bossi.

What exactly is federalism in the context of Italy and how do Italians feel about it?

I will attempt to answer this question, but I am prepared to be corrected.

What is Federalism?

Italy

The idea is actually very simple on paper.  Federalism will simply render Italian regional government and certain large metropolitan areas, such as Rome, Milan, Turin, Genova and Naples, more autonomous.  This means local taxes may be imposed and the income from these taxes will be spent directly in the regions in which they are raised.  Local government will also have greater powers to introduce legislation which is more region specific, even if such powers already exist now to an extent.

To all intents and purposes federalism is a form of decentralization of government, and, to me, appears to be similar to the council tax and business rates system which has been in force in the UK for decades.  In other words, federalism is really nothing more than the introduction of local taxes which go to local authorities.

How do Italians Feel about Federalism?

As far as I can gauge the situation, there are mixed feelings in Italy regarding federalism, but many agree it is better than the initial suggestion which was to split Italy into two administrative regions, effectively Northern and Southern Italy.  This is what the Northern League desired prior to Berlusconi’s last government back in 2001.

Somehow Berlusconi managed to turn Bossi away from the idea of splitting Italy in two, and instead convinced him that creating a sort of united states of Italy would be more feasible.

Now that the Berlusconi/Bossi coalition is back in power, moves are afoot to introduce new laws which will decentralise power – read: take power away from Rome.  Such laws, if they are ever introduced, will lead to a form of federalism.

Bossi has always considered Rome too south-friendly for his liking, and his party faithful number many who strongly believe that the north has been carrying the south financially for far too long.

It is true to say that Bossi’s supporter’s do have grounds for discontent, in that vast sums of money have been sunk into the south but nothing has really improved, and large portions of these vast sums have been spirited away, most probably into the Swiss bank accounts of mafia associates and a few crooked politicians.  That is not to mention misappropriated central government funding which is most probably behind many an unauthorised southern Italian tourism development and the odd housing estate or three.

Northern Italians are also angry that money ‘wasted’ on south Italy could have been put to better use in the north of the country, which is not as prone to spiriting away as much cash as the south.  Perhaps northern Italians are also a little miffed that they have not been able spirit away money, suggests he mischievously.

Overall southern Italians are the ones most wary of federalism, whereas those from the north do not seem to think it is such a bad idea.

At the end of the day though, what is being proposed may not prevent the misuse of tax income, in that the current proposal before Italy’s parliament at the time of this update – February 5th, 2011, is really no more than a combination of locally raised taxes. Money raised will be monitored by local authorities obviously, but in areas of Italy in which organised crime has infiltrated local government, creative bookkeeping may be used to disguise what has been collected from what has been channelled into illicit ‘funds’. This means that central government will still need to keep an eye on what is collected tax wise and how it is being used, in order to prevent the misuse of the cash being sent directly into local government coffers.

The Current Federalism Proposals – February 2011

An overview dated 3rd February 2011, in Italian, of the new taxes which will be created by the introduction of the so-called federalism legislation can be found here on the web site of Italian newspaper La Repubblica: Federalismo, le novità e le polemiche
 Dall’Imu alla compartecipazione all’Iva – Federalism, the latest and disputes concerning the Imu (imposta municipale unica – single municipal tax) and VAT sharing.

The weakened Berlusconi government is pulling out all the stops in an attempt to get the federalism/local tax legislation through Italy’s parliament, but the road is not proving overly smooth. Italy’s opposition parties oppose the new federalism law on the grounds that it may damage Italy socially and economically. Soaring levels of public debt in Italy mean that if the federalism law is introduced and fails to function effectively or costs a lot to implement, then Italy’s already unsound economic situation may worsen.

Is Federalism a Good Idea for Italy?

In theory, yes, in that Italian regional authorities will be able to raise taxes locally and directly administer the income deriving from these taxes, thus allowing them to focus on problem areas more effectively.

At present most funding has to be approved via Italy’s central government in Rome, and there is a long queue of regional authorities seeking funding.  Of course this long queue is headed in the main by Italy’s complex southern regions, much to the disdain of many of those from the north.

There is the possibility that local government may become more efficient with the introduction federalism  in that it will no longer need to wait for aeons for Roman signatures.  This means that Italian citizens should see more immediate benefits from the taxes they pay.

‘Should’ is the key word here, as what will happen in reality is uncertain. ,

Still, knowing that tax income is to be employed directly in the region it is being collected may encourage a few more of Italy’s traditionally tax-shy population to up the amount they declare to the tax man.  Possibly.

Will Southern Italy Lose Out?

Maybe.  Many southerners appear to be fearful that southern Italy will sink into a form of anarchy.  However, if suitable controls are put into place, then even the already anarchic south may benefit.

Such controls could come in the form of more accurate accounting relating to what is being collected, who is paying, and on what the money is being spent. Obtaining such information will not be at all easy unless central Italian government rules with a rod of iron on this issue.  This is highly unlikely though.

Southern Italy has always proven to be somewhat unruly area of Italy and continually claims poverty.

To resolve this so-called poverty, large handouts from Rome have often arrived.  Some of the money has been spent on good causes, but much of it has, as mentioned above, evaporated, leaving southern Italy in the same old mess.  This situation has continued for well over half a century, much to the anger of many northern Italians – hence the existence of Bossi and his northern league party, and, of course, the emergence of ‘federalismo’.

Should the Italian south wake up to the fact that it will have to sort out its own backyard, then this might, I repeat, might, result in greater levels of efficiency and some real development taking place.

When will Federalism Come About?

A very good question, if indeed it ever will.  With the strength of Berlusconi’s government and, surprise, surprise, with Northern League politicians devoting much time to sorting out the mechanics of what will prove to be a highly complex re-jigging of Italy’s systems, there is a higher probability that something will happen.

Assuming that legislation gets passed, then the first manifestations of the new federal Italy should start to make themselves felt around the middle of next year – 2009, I would predict: Comment – February 2011 – my prediction turned out to be inaccurate, as the progress of the Berlusconi government has been slowed as a result of its having to manage the series of scandals which have afflicted Prime Minister Silvio Berlusconi.  These scandals which have not, so far, led to the fall of the Berlusconi government, have, on the other hand, left it with a substantially weakened majority.  This means that actually getting the federalism legislation through Italy’s parliament is not going to be at all easy.

When things become more concrete, I’ll write more.