Differentiated autonomy, the critical issues that risk increasing the distances between rich and poor regions

To argue that the bill on differentiated autonomy splits the country seems an exaggeration. It is evident, in fact, how the country is already split, economically between North and South and politically precisely on the issue of autonomy. The publication in recent days on the Senate website of the “reading note” of the Budget Service of Palazzo Madama on the Calderoli bill and the reactions that followed have rekindled the spotlight on an issue that has always inevitably divided. The debate that has unleashed focused on the clash between the parties, above all the League which has the political responsibility for a symbolic reform, and the Brothers of Italy which has a centralized vision of the state, as is evident among other things from the ‘direction that Minister Raffaele Fitto is trying to give to cohesion policies and related funds, whether national or European, as well as the Pnrr. But beyond this obvious contradiction in the majority, and giving the weight it deserves – that is, null – to the fig leaf, or patch, if you prefer, which downgrades the reading note to an “unverified provisional draft”, what interests it’s going to see what the Senate technicians have written in the document to understand what the “criticalities” reported are. Because I’m not trivial.

How the transfer of functions works

To better understand the findings of the Senate, a few brief introductions are necessary. The reading note is an elaborate that analyzes the effects of the laws on public finance, in practice it fleas the technical reports prepared by the Government to accompany each provision in parliament and verify if and what additional costs it entails for the State. The mechanism for transferring powers to the Regions, envisaged by the bill which takes its name from the Northern League minister Calderoli, is based on an agreement between the State itself and the Region which requires autonomy. Among other things, the text provides that no new burdens should arise for the public budget. The competences attributed to the regions will therefore be financed “through sharing of the proceeds of one or more state taxes, accrued in the regional territory” (article 5 paragraph 2 of the bill), in such a way, specifies the Technical Report, “as to allow the full financing of the functions attributed to the regions” without “new or greater burdens on public finance”.

Rich regions and poor regions

“In this regard (…) we should point out, in general, some critical issues that could derive from the use of tax revenue accrued in the regional territory” reads the Senate reading note which continues: “In the case of a substantial number of functions subject to transfer, the possibility of an inadequacy of the regional partnerships on state taxes could emerge”. In other words, the resources taken from the revenue may not be enough. By way of example, today the healthcare entrusted to the regions is financed with a sharing of 70.14% of the VAT. Furthermore, “the poorest regions, i.e. those with low levels of revenue taxes accrued in the regional territory, could have greater difficulty in acquiring the additional functions” precisely because – based on the sharing mechanism – they would not have sufficient resources. This means that differentiated autonomy is convenient for rich regions which, if they wanted to, could also raise the level of services to citizens, while the others cannot even afford it. Distances would increase, in spite of cohesion. But the note from the Senate Budget Service adds other considerations: what happens in the event of a negative economic cycle and the consequent drop in revenue? The regions would have their hands tied since the functions acquired are financed by taxes whose rates are decided at a central level and on which they cannot intervene. An objection is also raised to the further attribution of administrative functions by the regions to municipalities, provinces and metropolitan cities: “the achievement of economies of scale could fail”, therefore with higher costs for the same service. Therefore, according to the Senate, “it should be ensured” that this takes place “without further additional burdens on the budgets of local authorities”.

The “financial invariance” clause and the LEP

But the real weak point of the Calderoli bill, according to the Senate, seems to be article 8 which introduces a clause of “financial invariance” by virtue of which the application of the new law and of each agreement between the State and individual regions must not result in new o higher burdens on public finance. In the event that this occurs, for example following the determination of the LEP (essential levels of services) and the relative standard costs, the transfer of functions to the regions is subject to the entry into force of the legislative provisions which allocate the necessary resources, in in line with public finance targets and budget balances. This also concerns the other regions because “the agreements, in any case, cannot prejudice the amount of resources to be allocated to each of the other regions”. The technical report accompanying the Calderoli bill considers it only “abstractly possible” that the determination of the Lep generates additional burdens for public finance. However, the Senate experts observe, “these onerous effects, as highlighted by the technical report, may materialize when the relative essential levels of services concerning civil and social rights are determined, which must be guaranteed throughout the national territory”. Not only. “Further charges – writes the Senate Service in the full-bodied comment on Article 8 which is worth quoting almost entirely – could arise in the phase following the determination of the LEP, during the verification of specific profiles or sectors of activity covered by the agreement , with reference to the guarantee of achievement of the essential levels of performance, as well as in the monitoring of the same”. Other costs could derive from the annual assessment of the financial charges deriving, for each Region concerned, “from the exercise of the functions and from the provision of services connected to the further forms and particular conditions of autonomy, according to the provisions of the agreement” with the State.

The short blanket

And here comes article 5 which, for financial coverage, refers to the sharing of taxes, “without, however, indicating which ones”, while for any further charges, “it merely refers to article 17 of the accounting law” on the financial coverage of laws and compliance with budget balances. “A specific clarification – underlines the note from the Senate – should, in particular, be provided with regard to the ways in which the agreements, not being able to jeopardize the amount of resources to be allocated to each of the other Regions, will have to reconcile this condition with that of transferring the different Regions the functions, with the relative human, instrumental and financial resources, concerning subjects or areas of subjects referable to the LEP, without compromising the financial sustainability of the measure. In other words, how will it be possible to guarantee the compatibility of a possible increase in tax revenue of the differentiated regions with respect to the legislation in force, due to the transfer of functions, with the need to maintain the essential levels of services (LEP) concerning civil rights and social in other regions”. In an even more brutal way, that is the cover of the revenue, if you pull too much on one side (rich regions) you discover the other (poor regions). Lastly, the sustainability of autonomy should be guaranteed not only at the time of transfer of functions and resources to the “differentiated” region, but also in subsequent years.