Alessandro Petretto

On the cost-benefit of the regionalisation of the National Health Service

Abstract. In this paper we analyse in formal terms the desirability of the regionalisation of a National Health Service. The policy consists of a devolution process, i.e. the increase in the health services provision to be decided by a region and financed by an increase in its revenues. The change is a marginal one, as it regards the part of supply of the health services exceeding a minimum standard, which for purposes of equity is maintained uniform in the national territory. As the central government is responsible for this component of the provision of health care (a federal “mandate”), the level of the said component is chosen by this authority and financed by federal taxation. Moreover, the government also applies an equalisation scheme based on the difference between a standard level of tax revenues and the revenues which the region is deemed able to raise for this purpose. Within the theoretical context of welfare improving reforms with distortionary taxation, we derive two conditions which focus on the regional, as well as the social, convenience of regionalisation.

Revenue Equalization Systems in a Federation with Tax Evasion

We analyse how vertical or horizontal fiscal equalization affects the overprovision of local public goods due to vertical fiscal externality, when there is tax evasion. The regional governments overspending incentive is examined both in case of a fiscal equalization based on pretax earned income and reported taxable income.

Federalism with Bicameralism

Abstract We analyse how bicameralism can affect national fiscal policies in a federal country when vertical and horizontal externalities interact. Conditions are provided to show when, at equilibrium, the two chambers agree or disagree on the choice of a national capital tax rate, depending on whether or not the pivotal voter in the two chambers is the same.

The modern theory of regulation as an inheritance of De Viti de Marco’s Cooperative State

The aim of this article is to analyse the relationship between the thinking of a major public finance scholar in the Italian tradition, Antonio De Viti de Marco, and the foundations of the ‘new’ economic policy which, at the end of last century in most industrialised countries, generated a profound reorganization of markets, particularly those of Public Utilities (PU). Thus, we link the Monopolistic State (MS) and the Cooperative State (CS) configurations defined by De Viti with the views of state suggested by modern Political Economy theory. We argue that a pro-competitive PU regulation can be interpreted as a process of moving away from the main features of the MS to those of the CS. Finally, by following some of De Viti de Marco’s precise intuitions, we analyse the topic of enterprise ownership. In this exercise of economic analysis in retrospect we will not be looking at De Viti as a precursor, but we wish rather to emphasize the actuality of his main methodological approach to public finance.

Need Equalization Transfers and Productive Efficiency of Local Governments

The paper deals with Need equalization formula for intergovernmental grants, and analyses,by a simple model, the impact of parameters changes on productive efficiency of a local government.By this kind of efficiency we mean producing and providing, at minimum cost and at high quality, a output level of a public service at least equal to a standard, fixed by the central government for pursuing horizontal equity among jurisdictions. In some German Landers the municipal transfers system is broadly inspired by such a criterion, and the recent reform of Italian equalization grants system moves in this direction.

Personal Income Tax Theory, Equity and Incentives: Some Comments and Extensions

The paper provides a critical review of the three essays originally presented at the 49th Annual Conference of the SIE by U. Colombino, C. De Vincenti and R. Paladini, and E. Longobardi. The aim of this comment-essay is to further enlarge their theoretical perspective and their policy implications. The paper does some general considerations on the entire block of the three essays and emphasizes some specific remarks on each of them. Despite it can not reach, of course, any conclusive results, it singles out some meaningful lines for future research, also as far as the institutional Italian context is concerned.

Spillover Effects in a Federal Country with Vertical Tax Externalities

We analyze how spillover effects may affect the choice of a federal tax rate in a federal country with vertical tax externalities. Our main result shows the conditions under which the federal tax rate with spillover effects is lower or higher than the federal tax rate without spillover effects. The effects of vertical tax externalities can be modified by the reaction of the federal government to the horizontal externality due to spillover effects.