Italy's latest attempt to reform local and regional government finances was unveiled last month by the simplification minister, Roberto Calderoli. As a member of the Northern League, which advocates more financial autonomy for the north, his proposals would introduce revenue-raising powers for the various tiers of the state, local, provincial and regional.
Respective authorities would have to be self-financing on the basis of their tax take. Communes and local councils would be financed through taxes on households, provincial authorities through imposts on transport and cars; Italy's regions would levy on other public services.
Authorities would be free to set charges as they wished and citizens would be able to see what services are provided and how much they are charged for them. The requirement to be self financing would, the Berlusconi government hopes, force local and regional authorities to be more energetic in tackling tax evasion.
Calderoli denied fiscal federalism meant he was favouring the rich north to the detriment of the poorer south. Equalisation would still be pursued, he said, with the richest regions and councils forced to help less developed ones. The difference is that resources will no longer be distributed from Rome.
Calderoli's proposals are meant to be part of the government's bid to ameliorate public finances. In order to meet the EU's requirement that Italy balances its budget by 2011, the finance minister Giulio Tremonti announced £24bn in spending cuts; they would be partly offset by selling off property confiscated from organised crime.
The Italian public administration minister Renato Brunetta predicted sickness absence in the public sector was going to fall 30-40% as this month measures to tackle absenteeism come into force this month. The new rules would allow medical "inspectors" to be sent to employees' homes after just one day's absence and would introduce the requirement to obtain medical certificates from doctors approved by the ministry.
Bonuses paid to sick workers would also be reduced. Brunetta says his tough stance has already seen absenteeism in central government go down by 10% in May and 20% in June.
The reforms are part of a wider attempt to cut Italy's 3.5m public workers and improve productivity by 20%, in a bid to save £30bn over the next five years.
Spain
Ministers were forced to cut short their holidays to attend an emergency cabinet meeting to discuss the country's economic crisis as inflation exceeded 5%, the highest for 15 years. The left-of-centre government led by Jose Luis Rodrigo Zapatero opted for fiscal incentives, abolishing inheritance tax, introducing VAT rebates and extending loans for state housing and smaller businesses. Together the plans are expected to inject around some £35bn into the economy.
France
The government wants to reduce the cost of social insurance and unemployment benefit but with employees already bemoaning the demise of the 35-hour week, the proposals will be controversial, particularly at a time when unemployment is on the rise again. The Sarkozy administration has ordered that anyone refusing two "reasonable" job offers should lose their entitlement to benefits. It has also introduced more flexibility into job contracts.
But unless the funding gap between social insurance contributions and benefits is reduced, France's efforts to reduce the public sector deficit to 2% by 2009 and to balance its books by 2012 look increasingly unlikely. The European Commission calculates that lower tax receipts and higher interest rates on the public debt mean France's deficit is likely to remain around 3% this year - not the 2.5% predicted.
From Bubb's Blog
From Whitehall Watch
