Alberto Zanardi

Tax Evasion, Tax Rates, and Reference Dependence

Using cumulative prospect theory as a notable example of reference-dependent preference, we revisit the basic portfolio model of tax evasion. We show that some controversial implications of the standard expected-utility theory, including that of a negative relationship between tax rates and evaded income, can be corrected in a direction more consistent with intuition and empirical evidence.

Fiscal decentralization in the Italian NHS: What happens to interregional redistribution?

This paper explores how pressures for an increased decentralization of taxing powers to sub-national governments may affect the degree of income redistribution across regional territories accomplished by the Italian NHS. In Italy, political responsibilities for health care are decentralized to regional governments, but the central government retains a critical role in ensuring all citizens uniform access to health services. To this end the central government runs an expenditure needs equalizing system to top up regional governments own resources. However, this system is currently put under question by strong political pressures calling for a weakening of central government involvement. Applying a well developed econometric approach we find that the NHS currently reduces interregional differences in per-capita income by about 7% of GDP. A reform of the NHS in terms of a reduction of expenditure standards produces a weakening of redistribution across jurisdictions, the size of which crucially depends on the financing arrangements of health care that will be actually adopted. We conclude that the decentralization of the NHS would give rise to relevant policy issues concerning in particular the different health care spending possibilities across regions and the impact on the interregional mobility of patients.

Designing Intergovernmental Fiscal Relations: Some Insights from the Recent Italian Reform

During the last decade, the Italian system of intergovernmental fiscal relations has been involved in a radical process of reform that is still under way. The reform has assigned Regions new taxing powers and has introduced a new system of interregional transfers. This paper provides a review of the recent reform and offers some tentative answers to the issues still open, relying on a series of simulations and projections. A number of conclusions have been reached. First, when the long-run performance of the new financing systems is investigated, regional resources may no longer be adequate to meet future health needs. Second, the incentives for active tax policies seem either to prove too weak or even to cause undesirable results. Finally, the complete devolution to the Regions of some significant public expenditure functions risks strengthening the polarisation of financial flows between the Northern and Southern Regions in the long run.

Market structure and technology: evidence from the Italian National Health Service

Sutton (1991, Sunk costs and market structure. Cambridge: MIT Press; 1998, Technology and market structure. Cambridge: MIT Press) theorised that industries evolve into distinct market configurations in terms of concentration, depending upon product homogeneity and whether R&D or advertising are relevant relative to set-up costs. This paper tests the existence of such a relationship between technological profiles and market structure empirically, using the health care services provided by the Italian National Health Service as the specific economic framework. Our results support the empirical predictions made by Sutton. In particular, in markets where the technological intensity is low the lower bound to concentration converges monotonically to zero when the market size increases, for any level of product homogeneity. Conversely, in markets where the technological intensity is high the lower bound of concentration converges to some positive (non-zero) value when market size increases, while the lower bound increases (from zero) when the level of product homogeneity increases.

Evaluating the Efficiency of the Italian Penitentiary System

In the aftermath of an official general pardon in 2006 Italian penitentiaries are struggling with overcrowding and budgeting problems. In order to identify the main causes of such difficulties we analyze an unbalanced panel of 142 Italian penitentiaries for the time period 2003-2005. A primary source of inefficiency is identified in unexploited economies of scale. In addition, estimation of a stochastic cost frontier highlights significant technical inefficiency, mainly attributable to overstaffing. Average prison size and technical efficiency are both smaller in the South than in the rest of the country.

La riforma del finanziamento delle regioni italiane: problemi e proposte

La riforma del finanziamento delle regioni italiane: problemi e proposte (di Giampaolo Arachi, Alberto Zanardi) - ABSTRACT: This paper deals with the effects of the reform of Italian Regions’ financing system which is under realization in 1999. The reform is based on the substitution of central government grants with a tax sharing system and on the introduction of a new equalization grants mechanism. Equalization rants are aimed to correct fiscal imbalances across Regions and to uarantee the provision of health services at standard level in every Region. The paper highlights the critical points of the reform. On one hand, the new financing system does not guarantee to the Regions the resources needed to meet the growth of health services demand, due to population ageing. On the other hand, the reform does not provide any equalization mechanism for the tax revenues yielded by the autonomous fiscal effort performed by single Regions.

Decentralisation and interregional redistribution in the Italian education system

The aim of this paper is to evaluate the potential impact of the reform designed to decentralise public education in Italy, currently under discussion, on interregional redistribution. The central government has always played a prominent financial and administrative role in the provision of compulsory education in Italy. This has had a strong redistributive effect on per-capita GDP across the regions of the country. The current fiscal decentralisation reform may well involve the education sector, as regional and local authorities are granted greater autonomy with regard to the provision and funding of educational services. Starting from certain plausible assumptions regarding the forthcoming fiscal powers, decentralisation and the expenditure levels set by the central government, this paper evaluates how these changes may affect the degree of interregional redistribution accomplished by the education system.

Sharing the Personal Income Tax Among Levels of Government: Some Open Issues from the Italian Experience

This paper considers some open issues concerning the role of the personal income tax in regional and local finance. It compares different technical instruments to share the personal income tax among levels of government, analyzing particularly the differential effects of the two main forms of overlapping taxation, the surtax and the surcharge. It is proved that both instruments increase the redistributional impact of personal income taxation, the surcharge to a larger extent than the surtax. The second part of the paper describes the present framework of the sharing of income tax in Italy, based upon regional and local surtaxes, and the new perspectives opened by the reform of intergovernmental fiscal relations recently approved by Parliament.

What Happens to Interregional Redistribution as Decentralisation Goes on? Evidence from the Italian NHS

In this paper we explore how political pressures for an increased decentralisation of revenue and expenditure competencies to sub-national governments may affect the degree of interregional redistribution accomplished by the public sector. We do this by focusing on a specific case, that of the National Health Service (NHS) in Italy. We estimate redistribution across regional jurisdictions by the NHS under the current institutional setting and under hypothetical alternative decentralised scenarios. Using actual regionalised public budget data for the years 1999-2006, we find that the NHS reduces differences in regional per-capita GDP by about 7% of GDP. This effect amounts to approximately 16% of redistribution by the total public budget and is largely driven by NHS expenditures. We then show that these results are subject to significant changes under alternative scenarios of intergovernmental relations, which we construct consistently with current instances emerging from the Italian debate on fiscal decentralisation reform. We show that political pressures for lower central government involvement in decentralised policies, such as health care, may result in lower levels of income redistribution across Italian regions.

Switch towards tax centralization in Italy: a wake up for the local political budget cycle

The abolition of the municipal property tax on owner-occupied dwellings accomplished in Italy in 2008 offers a quasi-natural experiment that allows for the identification of the presence of political budget cycles - the incentives for municipalities close to elections to manipulate policy outcome decisions. Our empirical analysis shows that the reform impacted on municipalities that in 2008 were in their pre-electoral year, by expanding the size of their budget in the form of an increase of current expenditure and fees and charges, but this did not occurred in municipalities that experienced their pre-electoral year before 2008.