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IREF - May 20, 2012

Fiscal Decentralization in Weak Institutional Environments: Evidence from Southern Italy

Sergio Beraldo, Massimiliano Piacenza, Gilberto Turati
Fiscal Decentralization in Weak Institutional Environments: Evidence from Southern Italy
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The free-market view is in general in favour of decentralization. By and large, the rationale behind this claim is that decentralized taxation and spending imply greater accountability for politicians and public officials. In turn, greater accountability generates less corruption and better services to the community. The authors of this paper suggest that this claim needs to be taken with caution, since the quality of the local institutions significantly affects the outcome of fiscal decentralization (spending performance).



  

  

    



  	

        IREF - May 08, 2012
      

    
Evidence From Italian and French Regions

      
Fiscal Rules vs. Political Culture as Determinants of Soft Budget Spending Behaviors

      
Jean-Michel JOSSELIN, Fabio PADOVANO and Yvon ROCABOY

  
  

  

	
Fiscal Rules vs. Political Culture as Determinants of Soft Budget Spending Behaviors
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Executive Summary

The main purpose of this paper is to investigate whether, and to which extent, the rules introduced by central governments effectively restrain the spending behaviour of the decentralized authorities. In this paper, the authors provide an innovative comparative analysis by considering two countries that share the same degree of economic development and many cultural traits – France and Italy. Yet, these two countries differ in one crucial respect. France has a tradition of strong centralization, bureaucratic discipline and detailed technocratic control on the periphery (the regions). By contrast, Italy is known to follow a more flexible approach, which allows for some negotiation between the central and the peripheral authorities and feeds expectations for assistance and bail-outs, should the regions engage in excessive spending and violate the budgetary rules set by the centre.

	    

      

    		

	

	  


    


  



  

  

    



  	

        IREF - Apr 30, 2012
      

    

      
Lessons from Lithuanian austerity

      
by Kaetana Leontjeva, IREF fellow and policy analyst at Lithuanian Free Market Institute

  
  

  

	
Lessons from Lithuanian austerity
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In recent years, the Baltic States have been showcased as an austerity success story. While the whole world has seen countries such as Greece, Spain and Portugal struggling to reduce their public spending, Lithuania has been hailed as an austerity example. Lithuanian success in public spending cuts has been widely acknowledged; yet simultaneous tax increases and their harmful effects have received less attention. Since the end of 2011, however, the country once again found itself embroiled in a budget crisis and is now moving down the dangerous road of tax hikes.

	    

      

    		

	

	  


    


  



  

  

    



  	

        IREF - Apr 28, 2012
      

    

      
The financial transaction tax will reduce Member States' GNI contributions to the EU budget by 50%

      

  
  

  

	    
If adopted as a new own resource of the EU budget the financial transaction tax (FTT) will significantly reduce the contributions of member states to the EU budget, according to estimates presented yesterday by the European Commission. Member States' contributions would be slashed by €54bn in 2020.The Commission proposes that two thirds of the revenues of the FTT go to the EU budget, reducing by the same amounts Member States' contributions based on their GNI, with the remaining one third being retained by Member States.

	    

      

    		

	

	  


    


  



  

  

    



  	

        IREF - Apr 11, 2012
      

    

      
The Spanish Corporate Income Tax Hike Will Hurt Economic Recovery

      
Adrià Pérez Martí, economist at the Instituto Juan de Mariana and tax adviser at JPB Asesores, Spain

  
  

  

	    
Last March 30, the Spanish Government announced its most important measures to reduce the fiscal deficit for 2012. These actions have been based on reducing public spending and, again, increasing taxes. “Again” because on December 30, 2011, the conservative new Government already raised the Personal Income Tax, making Spain one of Europe’s most heavily taxed countries.